How Our Democracy Works With Bankruptcy Law Article

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How Our Democracy Works With Bankruptcy Law

When it comes to foreclosures and bankruptcies, democracy is not meant to be efficient, because in the tangle of the inefficient rules live the safety and security of popular rights.

Author: Bob Jones

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The judge is not there to clear the sand from the gears of the machine, the judge is actually the sand. Finally there is the broader role of the bankruptcy law in a democracy. In the 1930s, when homes across the country were being foreclosed on, it was typically done by the bankers in town, or at least in your state. It was not a faceless corporate name which shielded another faceless trust which in turn shielded a large institution or foreign investors that want to take your home. It was Bill the banker who might have been one of your neighbors.

In the past, when someone filed bankruptcy and was being foreclosed on, a local banker had to think hard about whether foreclosing on the property and reselling it would be a good decision for the bank. He had to decide how it would affect the community and the bank that makes the loans as well. He also had to address whether it would drag down the local economy and whether or not it would hurt the bank in the long run. The banker might even be friends with the person filing personal bankruptcy and have to take that into account where nowadays, banks have become a faceless, group of unknown investors shielded by layer upon layer of middlemen, agents and lawyers who don't even care about the community at all. Now by the courts forcing service to prove who owns the loan, courts are opening the doors so homeowners and the American public can actually see who is taking their homes and hurting their communities.

Many people in our current economic situation are lucky the US does not have debtors prison. Recently the there was an article describing how foreigners are now fleeing Dubai to avoid debtors’ prison. Dubai's economy, heavily reliant on real estate, is crashing and as many as 3000 cars are purposely abandoned at the Dubai airport, left behind by fleeing, debt ridden foreigners, a stark sign of the times, to be sure.

It makes one appreciate being able to file for bankruptcy, which exists in most of the developed world for people who cannot pay their debts. Debtors’ prisons were abolished in the US on the federal level in 1833 and most states followed suit soon thereafter.

Bankruptcy laws are not a modern idea as the issue is mentioned throughout history, going back as far as ancient Hebrew texts. As an individual, you have two primary options for protection whether you live in California, Florida, Michigan, or any other state. US bankruptcy laws are federal and apply to every state. You can file chapter 7, in which you asked the court to erase all debts included in your filing documents. In return, you agree to turn over the majority of your assets to the court. They will convert these items into cash and pay your creditors as much and as thoroughly as possible.

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