The Court Designed Chapter 7 to Give People a Fresh Start

February 27th, 2010 by admin

Chapter 7 bankruptcy is what most people think of when they hear the word bankruptcy. In a chapter 7, all of your dischargeable debts are wiped out. In most cases that are filed, the debtor does not lose any of their possessions.

 

The Supreme Court of the United States stated, “Bankruptcy was designed to relieve the honest debtor from the weight of the indebtedness which has become oppressive and to permit him to have a fresh start in life, freed from the obligation and responsibilities which may have resulted from misfortunes.” This fresh start allows hundreds of thousands of Americans to live without the fear and anxiety of living paycheck to paycheck.

 

When a debtor has to file bankruptcy, even outside the court everyone seems to know who is owed the money on a loan, the court must be satisfied that the actual parties before it have this standing. As US bankruptcy courts recently have pointed out, in most cases this will mean proving that the party appearing in court has an actual interest in the case. When a lender has not received a complete assignment or cannot prove that they have, based on the documents filed with the court, the court lacks the power under the Constitution to act. This is a critical point. American federal bankruptcy courts are limited creatures because Americans rightly fear and contain power and federal district judges with lifetime terms have the potential for tyranny. The constitutional limit’s that was put on the reach of the federal courts was meant to contain this great power.

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