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Financial Relief Through Bankruptcy is a Federal Right

The financial relief obtained by filing bankruptcy is a federal legal right established in our United States Constitution (Article II), and is designed to give people in debt a “fresh start,” so that, among other things, they can become again productive members of our society. Our United States Supreme Court has commented on the issue; here are quotes from four of its cases (check the year each case was decided -can we trust stuff this old):
Case 1: “It is the purpose of the bankrupt act...to relieve the hon- est debtor from the weight of oppressive indebtedness, and permit him to start afresh free from the obligations and responsibilities consequent upon business misfortunes.” Williams v. U.S. Fidelity & Guaranty Co., 35 S.Ct. 289 (1915), citing Wetmore v. Markoe, 196 U.S. 68 (1904); Zavelo v. Reeves, 227 U.S. 625 (1913); and Burl- ingham v. Crouse, 228 U.S. 459 (1913).
Case 2:“The principal purpose of the Bankruptcy Code is to grant a ‘fresh start’ to the ‘honest but unfortunate debtor’.” From Marrama v. Citizens Bank of Massachusetts 127 S.Ct. 1105 (2007). (Cases continue on our website.)

“One of the primary purposes of the Bankruptcy Act is to ‘relieve the honest debtor from the weight of oppressive indebtedness, and permit him to start a fresh free from the obligations and respon- sibilities consequent upon busi- ness misfortunes’. This purpose of the act has been again and again emphasized by the courts as being of public as well as private inter- est, in that it gives to the honest but unfortunate debtor..., a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of pre-existing debt.” Local Loan Co. v. Hunt, 54 S.Ct. 695 (1934).

“The central purpose of the [Bankruptcy] Code is to provide a procedure by which certain insol- vent debtors can reorder their af- fairs, make peace with their credi- tors, and enjoy ‘a new opportunity in life with a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.” Grogan v. Garner, 111 S.Ct. 654 (1991).