Is Bankruptcy Moral Or Ethical? Turns Out, It Sure Is

So you’re ready to file for bankruptcy. All your paperwork is in order, and your bankruptcy attorney has told you that your assets and finances are right where they need to be, to allow you to file, and get the fresh start that you need. Except there’s one thing that’s on your mind, a thought you can’t seem to get rid of: Is it ethical or moral to file for bankruptcy?

The Public Opinion

That’s an understandable thought; the general public often has a negative opinion of bankruptcy, and a misunderstanding of the process and history of bankruptcy. That can make it easy to doubt the ethics of bankruptcy—but don’t fall into that trap.

Bankruptcy is in the Constitution

It is apparent that the founding fathers of our country didn’t think bankruptcy was unethical. In fact, they thought it to be so important, that bankruptcy is actually specifically written into our constitution. Article I, Section 8 of the constitution specifically gives congress the right to enact laws related to bankruptcy, meaning that our nation’s founders thought it to be important enough to be given a specific provision in the constitution.

In fact, debt, and the inability to get out of it by consumers (then, mostly farmers) are what caused our constitution to be drafted in the first place. Pre-constitution, Shay’s Rebellion was an attack on courthouses by farmers, who were in debt, and being imprisoned and having their farms taken. They felt powerless, with no recourse.

The drafting of the constitution changed that, and bankruptcy is one power that consumers have to even the playing field between them, and creditors.

Equality Between Parties

Our nation and our legal system thrive on equality; the balance of power between both sides of a debt, argument or disagreement. Without bankruptcy, consumers would be powerless, giving creditors all the power.

Creditors do get a fair shake in bankruptcy, First, the bankruptcy means test says that if someone makes too much money, they cannot file for Chapter 7 bankruptcy. Although bankruptcy gives consumers the right to keep some property by way of exemptions, people who have too much property may have to file for Chapter 13, or else, may not be able to file for bankruptcy.

Good For Creditors?

Bankruptcy gives businesses and creditors another advantage: Your fresh start lets you spend money again. It lets you buy furniture or go to movies or restaurants, or do whatever it is you do when you have money freed up again. Our economy would not work, and businesses would go under, if all of us were using our discretionary income to just pay off debt we incurred 1, 5, or 10 years ago.

You can even borrow money again (although you should be responsible about it after bankruptcy, of course). This means that creditors may have lost money when your debt was discharged—but they will make money again from you at some point.

Bankruptcy is a big decision. We can help answer all your questions. Contact the Boca Raton bankruptcy attorneys at the Law Offices of Stephen Orchard at 561-455-7961 for help.

Sources:

history.com/topics/early-us/shays-rebellion

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/process-bankruptcy-basics#:~:text=Article%20I%2C%20Section%208%2C%20of,%22Bankruptcy%20Code%22%20in%201978