This website uses cookies to ensure you have the best experience. Learn more

Do Bankruptcy Laws Unjustly Favor Lenders?

1088 words - 5 pages

Do Bankruptcy Laws unjustly favor Lenders?
Intro
Bankruptcy is a legally declared inability or impairment of ability of an individual or organizations to pay their creditors. Bankruptcy law provides for the development of a plan that allows a debtor to resolve his debts through the division of his assets among his creditors.

Although the goal of the modern bankruptcy is to allow the debtor to have a “fresh start,” and to be granted relief of some liability, there haven’t been any regulators to protect consumers or debtors since the first Bankruptcy Law that the Congress passed in 1797 which lead to imprisonment of thousands of debtors. And it wasn’t till 1841 that the debtor could ...view middle of the document...

The bill, which passed in the Senate, will make it more difficult to get rid of debts by filing for bankruptcy, forcing tens of thousands of people to work out repayment plans instead. The Means Test which took effect with enactment will set up an income-based test for measuring a debtor’s ability to repay debts. Those with income above the state’s median income who can pay at least $6,000 over five years--$100 a month—will be forced into Chapter 13, where a judge will then order a repayment plan.

The most important aspect of the bankruptcy code was the automatic stay provision. This allowed consumers to file for bankruptcy at anytime during the creditor’s collection process putting an immediate stop to all contact and collection activities from the creditor. The new law requires that a debtor receive and pay for credit counseling from an approved non-profit credit counseling agency for 180 days prior to filing Chapter 6 or Chapter 13 bankruptcy. However, during this same period of time the creditor is not restrained from collection efforts. One story tells an example; Margaret is a homeowner in Jacksonville, Florida and is 6 months behind on her mortgage. As a rule, credit counseling agencies only work with credit card companies and have little or no training with dealing with mortgage companies. After receiving foreclosure papers, Margaret goes to see her attorney to file for bankruptcy and is told that she must first seek credit counseling before filing for bankruptcy protection. Meanwhile, the foreclosure proceeds on schedule and a sale date is set 120 days later. However, Margaret still has not completed her 180 day requirement. What will happen to Margaret’s home? The home will be sold and she cannot stop the sale by filing bankruptcy. One pay check is literally what separates many families from home security and despair and the new bankruptcy law severely punishes those who slip behind on their mortgage payments.

>Report - Protecting Suppliers of ‘Too Big to Fail’ Companies

Bankruptcy judges have the right to reduce and even eliminate creditor claims in virtually all forms of bankruptcy – except when the debt is secured by a prime residence.

The 2009 Bankruptcy Law “Helping Families Save Their Homes in Bankruptcy Act”...

Other Papers Like Do Bankruptcy Laws Unjustly Favor Lenders?

Should a Christian File Bankrupt? Essay

808 words - 4 pages help immediately because he is probably feeling like the weight of the world is on his shoulders. Therefore, as a friend I would direct Carl to the word of God and see what the Bible has to say about his situation. God’d s word does not forbid filing bankruptcy nor does it forbid the borrowing of money. If the children of God are to be lenders, then somebody has to be the borrower. “Beliefnet, a Web site focused on religion and spirituality, filed

Business Failure Essay

1409 words - 6 pages manager to run the business 3. Sell the business outright: this is the last option to sell either to an employee or an outsider. Unfortunately business failure happen, and when they do it can be devastating for the entrepreneur and those surrounding him because in starting the venture, the entrepreneur might have surely sacrificed lot of time, money, and took risk with people surrounding you. This is why a business plan is written from a very early stage, so with laws and realities changing, the entrepreneur should try and update it often, also write from your assumptions, especially during business’s life cycle.

Court Case

3482 words - 14 pages (“BAPCPA”), and Congress did not make amendments to the Bankruptcy Code to restrict postpetition presentment of debtor’s checks by payday loan lenders. To the extent the subject was even on the mind of Congress at the time it was considering BAPCPA, perhaps it believed that the avoidance powers in Section 549 of the Bankruptcy Code are a sufficient remedy to protect the estate from such transfers. In any event, there is an overriding

Banking Regulation

1154 words - 5 pages of mortgages in 2000 to 12.3 percent by August 2005. Banking Regulation Page 3 With the subprime industry’s growth came problems for homeowners. Subprime lenders foreclose on properties much more frequently than do conventional lenders. The prevalence of subprime loans contributed to a 31-percent spike in foreclosure filings in the first half of 2006. Economists in warned that if home prices fell, these subprime loans would

Team Chart

953 words - 4 pages Business Form Number of Owners? Are Owners Liable for the firm’s debt? Do Owners manage the firm? Does an Ownership change dissolve the firm? Access to Capital Taxation Sole Proprietorship One Yes Yes, in a sole proprietorship the owner manages all aspects of the business. No, Not always, once the change in ownership, the owner can change the decisions pertaining to the goal of the company and the gp's will have to make that change in direction

Managerial Finance

2509 words - 11 pages lending.   Subprime mortgages with adjustable rates were the majority of these loans.   These loans provided borrowers who had high debt ratios, low credit scores, or little or no down payment funds, an accessible way to obtain home ownership.   Due to an increasing government drive for home ownership, these high risk loans were given in multitudes. Thus, when the rise in housing prices stopped in 2006, inevitably many subprime borrowers had difficulty making their mortgage payments. The housing bubble and particularly the excesses of the subprime mortgage market became even more evident when many subprime mortgage lenders began declaring bankruptcy around March 2007.

Inside Job Film, Essay

562 words - 3 pages financial decisions for the government when their respective firms filed bankruptcy is sickening. To add salt to the womb, you hear about firms that get bailed out of bankruptcy turn around and give out big bonuses within a few months. There were a number of events and decisions that occurred that snowballed to create the financial distress. I do believe that several things could be done to make improvements, starting with holding those that

Accounting

3860 words - 16 pages Collateralized Financing, investors and lenders would notice the transactions Lehman Brothers were engaging in, and possibly corrective measures would have taken place prior to the events leading up to bankruptcy. As a CFO, recommend which measures could have been taken to prevent this ethical breach and how each measure should be implemented in the future: Lehman Brothers’ management team wanted to increase the firm’s risk portfolio and pursue

Ethics

5512 words - 23 pages unlimited access to their account activity. Also, hiring personnel that do not pose a conflict of interest and have the required education and experience would ensure that shenanigans like this are eliminated, minimized, or at the very least discovered early on. Predatory Lenders The spending habits of today’s youth are increasing at a cyclic rate. There are fewer young adults graduating college and more filing for bankruptcy. Many are not

Payday Loans

3297 words - 14 pages which in turn makes them profit by keeping customers in a cycle of debt. Payday lenders do specify on the documents how much the fee, principle, and interest rate will be on the loan. This does not violate the Truth in Lending Act directly but the approach they take is improper and unethical. The customers that normally use a payday loan are uneducated individuals who do not know better than to look at certain details of a loan. The individuals

Predatory Lending

2835 words - 12 pages loan is made to a borrower in the hope or expectation that the borrower will default. (Predatory, N.D.) The market for short-term loans have only been around for the past twenty years, however, has expanded at such a rate that there are now more short-term lenders in America than there are Starbucks and McDonald’s. (Center, 2011) Borrowers of this financial service lack necessary information to choose financial products, do not see themselves

Related Essays

Subprime Mortgage Crisis And Ethics Essay

1754 words - 8 pages any of the participants in a manner that would make such conduct unfeasible could prevent such a massive buildup of highly overvalued assets from accumulating in the future” (p. 73). In addition, laws need be set in place that governs accountability and responsibility for less than ethical actions carried out by individuals. Again Vazire (2009) stated that the lack of accountability allowed brokers, lenders, and securitizers to act recklessly

Business Ethics Essay

564 words - 3 pages objections of Republican senators, appointed Cordray to the post in a recess appointment – Wikipedia What was Warren’s involvement in the government response to the collapse of the financial markets? In 2002, Warren published “Financial Collapse and Class Status: Who Goes Bankrupt?” in which she analyzed a sample of the 1.5 million families who had filed bankruptcy and found that “families in bankruptcy share many of the same educational

Bankruptcy Essay

876 words - 4 pages Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating assets to pay their debts or by creating a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. Most cases are filed under the three main chapters of the bankruptcy code. They are Chapter 7, Chapter 11, and Chapter 13. Federal courts

Financial Industry Essay

1899 words - 8 pages costs and capital structure are irrelevant. The value of a firm is independent of its debt ratio and the cost of capital will remain unchanged as the leverage changes. Thus, Debt issuance will not matter if taxes are not present. However, in reality, taxes do exist in a typical business environment. This brings about two important aspects; tax shield (or tax benefit/tax savings) and financial distress (or bankruptcy/default risk). Pros Debt