Bankruptcy gives the “Honest Debtor” a “Fresh Start”
In a case over a 100 years ago, the Supreme Court said that bankruptcy was a way to give a fresh start to an “honest debtor” and to take the “weight” off of his personal or business life, becoming free of debt and moving forward.
Specifically they said, “Systems of bankruptcy are designed to relieve the honest debtor from the weight of indebtedness which has become oppressive and to permit him to have a fresh start in business or commercial life, freed from the obligation and responsibilities which may have resulted from business misfortunes.” Wetmore v. Markoe, 196 US 68 – Supreme Court 1904.
Thus, the Supreme Court understood that “misfortunes” happen to people and are a part of American life. Misfortunes can be a job loss, a divorce, a failed business, rising cost of living, health issues, and even a pandemic. When such misfortunes happen people can fall into debt. People generally fall into debt when they are unable to earn enough money to pay for their needs. When someone is on a tight budget they are faced with the challenge of trying to survive and to pay back the debt. At that point if paying the debt makes it difficult or impossible for someone to also be able to pay for their housing, food, clothing, transportation, and health care, then the debt becomes “oppressive” and bankruptcy becomes the relief valve for such situations.
When a person has honestly fallen on hard times, not purposely tried to defraud a creditor, then the central goal of bankruptcy is to give such a debtor a “fresh start”. There are other factors and purposes of bankruptcy, but the main economic and social purpose of the bankruptcy system is to give the debtor a clean slate and the opportunity to start over.
If you are in need of a “fresh start” contact the Law Office of Michael Johnson which is a general practice law firm with an emphasis on bankruptcy, debt settlement, and IRS and state back tax resolution. We serve clients throughout Elk Grove, Sacramento, Roseville, Folsom, and Northern California. For more information or to schedule a consultation, please contact us at (916) 350-4829 or visit our website at www.MichaelJohnsonLaw.com.
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