Is bankruptcy law constitutional?

[ear]

Why is it that every 7 years, someone can just wipe all their debts free, and the rest of society has to pay for it?

[edin]

Corporations do it more often because there are no 7 year limits.

[karlitis]

You don't provide a challenge to it in terms of constitutionality, though.

Edit: fair enough. I am just saying, I don't believe it is, nor have I seen/heard any challenges to it.

[christie42]

Yes

Bankruptcy is not the panacea that this question pretends it to be. Usually the stigma never goes away and news laws make it tough for anyone who has a job making more than 40K.

[berwin]

Look at all the usury that is allowed. A credit card company can legally charge someone interest and fees that amounts to triple what the person actually spent. It's not uncommon for credit card interest payments to get so bad that a person is basically spending their whole working to make someone else rich.

At some point, it just becomes legalized slavery. It's simply unconscionable to allow someone to owe say $50,000 in credit card debt and other debts, with no way to get out of it, ever, and spend their whole life working to pay down a debt that will never actually get paid down. Often, by the time someone files for bankruptcy they have already paid more money back to the credit card company than they ever actually rang up.

You should also know that most bankruptcies in the US are related to medical bills not deadbeat people trying to work the system. Obama's health insurance reform actually will address this problem and do something about it.

[barend31]

Because the rules accept the fact that sometimes there are things outside the control of individuals that negatively effect their credit such as job loss, economic factors, sickness and of course personal stupidity. What the 7 year standard does it make the bankruptcy stay on someone's credit rating for at least 7 years. It's viewed worse at the start and less serious near the end of the 7 years.

Of course, bankruptcy is not automatic. Someone must apply for it and have it accepted. At the same time they normally don't just walk away from their debts but they have to pay back something, perhaps only pennies on the dollar, but they do bear some of the irresponsibility both immediately and over the following 7 years.

[fyfe]

U.S. Constitution, Article 1, Section 8:

"The Congress shall have power...To establish... uniform laws on the subject of bankruptcies throughout the United States..."

So....... Yes "bankruptcy law [is] constitutional."

[said99]

What is unconstitutional about it?

Better question, why would someone loan money to someone who has already file for bankruptcy once? Proves they are not reliable, so if they want to risk loaning money they deserve what they get.

Just saying....

[giulio]

No, it is not. "Paula" gave you the correct answer.

[emek]

Yes it is Constitutional. Article 1, Section 8, Clause 4 of the Constitution.

"The rest of society" doesn't pay when a person files for bankruptcy, only that person's creditors lose their ability to collect their debts. In these last few years, as bankruptcies have skyrocketed, the banks and credit card companies have remained enormously profitable.