Chapter 7 Bankruptcy Seizures

Avoiding Chapter 7 Bankruptcy seizure sales and liquidation through comprehensive pre-planning

Remember the phrase "Debtors Prison?" The concept was brutally real in merry old England during medieval times. Unpaid debts could result in imprisonment, public flogging, and even the death penalty. Chapter 7 Bankruptcy law in the United states was modeled after English Common Law. The US Constitution empowers US Congress alone to establish uniform bankruptcy laws throughout the United States. This power was first used in 1800, which began the slow development of the Code into the current system. Until the late 1970's, bankruptcy was rare and sporadic laws were enacted, repealed, amended and contested with little public concern. These laws tended to treat individuals and businesses, rich and poor, in a similar fashion when seeking Chapter 7 Bankruptcy relief. During the 1970's, as divorce became more acceptable socially, individual Chapter 7 Bankruptcy filings rose in lock-step. Consequently, large financial institutions grew increasingly concerned and quickly increased lobbying efforts for compressive legislative reform. As a direct result of these lobbying efforts, the treatment of individuals and businesses reached a controversial point of departure.

Business Chapter 7 Bankruptcy

The Bankruptcy Reform Act of 1978 created Chapter 11. This Chapter provides extensive authority for a debtor-in-possession to reorganize debts, reduce payments, repudiate contracts and liquidate assets as if standing in the shoes of a Trustee. This Chapter is also burdensome in it's reporting requirements, complexity of the law, and extensive expertise to complete a plan of reorganization. The Effect of Chapter 11 was to place lucrative terms in the hands of a wealthy few who could afford these expensive administration requirements. Large corporations and wealth individuals received a wide assortment of financial planning tools that were simply not available to the average citizen - based on cost.

Individual Chapter 7 Bankruptcy Reform

The Bankruptcy Reform Act of 1994 began the current trend that endures today. This Act created new restrictions for individual Chapter 7 Bankruptcy filers. The success (for institutions) in promoting the 1994 Reform Act greatly encouraged lobbyist who again increased their lobbying efforts in Washington. Each year since 1994, new bankruptcy reform acts have been introduced in both Houses of US Congress which propose to further limit individual access to US Bankruptcy Courts.

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