This article is part of my bankruptcy alphabet series

People are Not Numbers

When numbers are used to identify people, it’s usually when they are in prison.   The Bankruptcy laws used to be about helping out people (and businesses) in need.   They were about equitable solutions to serious financial problems.   Laws in general are designed to help society as a whole, but one must never forget it is always about people.   When a potential bankruptcy client comes into my office with debt problems, it is very personal to them.   Most of my clients never imagined being in this situation, and they would hope that the laws (and their attorney) are there to treat them as individuals, and not numbers.

The New Bankruptcy Laws

Back in 2005 the Republican controlled Congress and President G.W. Bush passed sweeping changes to the Bankruptcy Code that had been in existence for several decades prior.   These “new bankruptcy laws” were designed to reduce bankruptcy eligibility to a numbers game instead of basing it on need and the overall good for society.

Prior to 2005 the overriding purpose of the bankruptcy laws was one of equity.   I discussed courts of equity in my bankruptcy alphabet post on Justice.   Bankruptcy judges at that time had far more ability to balance the needs of a bankrupt debtor to get a fresh start with the rights of the creditors to get paid.

With the new bankruptcy laws, Congress instituted a very complex “means test” to determine threshold eligibility to file under Chapter 7.  The means test, in its base form, takes any and all income received by the debtor in the six calendar months prior to filing the bankruptcy case and subtracts from that certain expenses allowed under IRS guidelines (one size fits all, apparently).

The Saving Grace is Attorneys

While bankruptcy attorneys are of course bound by the laws, experienced ones have figured out where the laws can be applied beneficially for their clients and how to maximize the effectiveness for their specific case.   Similarly, while Congress tried to reduce the flexibility bankruptcy judges have to make equitable rulings, there is still plenty of room for Judges within the laws to do Justice and reach a fair and just result in each case, hopefully never forgetting these are people, not numbers in front of them.

The best way to avoid being just a number in the bankruptcy process is to hire a bankruptcy attorney that understands where the laws have been, where they are, and where they may be going.

Others Writing on the Letter “N”:

• Naked–New York Bankruptcy Lawyer Jay S. Fleischman
• Never–Cleveland Bankruptcy Attorney, William Balena
• No Asset–Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
• No Asset Report–Honolulu Bankruptcy Lawyer, Stuart T. Ing
• Non-PMSI–Philadelphia Suburban Bankruptcy Attorney, Chris Carr
• Nondischargeable–Northern California Bankruptcy Attorney, Cathy Moran
• Nondischargeable–Metro Richmond Consumer and Bankruptcy Attorney, Mitchell Goldstein
• Nondischargeable Debt–Omaha Nebraska Bankruptcy Attorney, Ryan D. Caldwell
• Notice–Colorado Springs Bankruptcy Attorney, Bob Doig
• Non-exempt Property–Miami Bankruptcy Attorney, Dorota Trzeciecka
• Notice–Taylor, Michgan bankruptcy Attorney, Chris McAvoy
• Negative Notice–Jacksonville Bankruptcy Attorney, J. Dinkins G. Grange
• NACBA–Wisconsin Bankruptcy Lawyer, Bret Nason
• California Nothern Bankruptcy Court, Cate Eranthe
• Non-Attorney Bankruptcy, Peter Behrmann

Image Courtesy of lrargerich

Today the U.S. House of Representatives voted against legislation that would have allowed homeowners to modify their loans on a principal residence in a bankruptcy case (Chapter 13).    This is at least the second time this amendment has come up for vote, and this time only 50 democrats voted in favor.   Thus, the bankruptcy law remains unchanged on this issue.  Loans against a principal residence cannot be modified in a bankruptcy case (except that in some circumstances–and only in some districts– a junior lien may be removed if and only if the value of the property is less than the amount owed to the 1st mortgage).

If you want to know how your Member of Congress voted today, go to http://clerk.house.gov/evs/2009/roll963.xml.  If you want to compare your Representative’s vote today with that on H.R. 1106, go to http://clerk.house.gov/evs/2009/roll104.xml to see their earlier vote.  Of course, there were a number of variables associated with today’s vote that were not a factor in the earlier vote, particularly given that Members also were being asked to vote against the banks by supporting the creation of a Consumer Financial Protection Agency (CFPA).