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Lecture Notes: Bankruptcy |
A little background and history;:How did we get to where we are now.
Substantive case law and statutes: What is the law that creates bankruptcy rights and duties?
Procedure: What is the source of the procedural rules governing bankruptcy practice?
The underlying thinking under the code leads to what can be called the dual nature of bankruptcy: We are looking for remedies for both the creditors and debtor.
For the creditors, the theory is that the disaster of bad debt should be spread equally among all of the creditors, so that one doesn't, through luck or aggressive collection, get the entire bill paid, and another, through bad timing, gets nothing.
For the debtor, the theory is that there should be a rehabilitation, or fresh start.
At one time, bankruptcy under the old act required proof of insolvency. Now, a debtor may use the bankruptcy law on demand, without otherwise qualifying, to get a fresh start.
The creditors are supposed to obtain an equitable distribution of the debtor's non-exempt assets among all the qualified creditors.
Abuse of the system can be prevented by the court, dismissing the case and denying bankruptcy discharge. In addition, creditors may seek or order denying the discharge of their particular debt.. The court has the power to prevent substantial abuse, where a party attempts to "game" the system, and the creditors have an incentive to bring such matters to the attention of the court.