>have i got this right, then? is it too crude to say that debtors are
>allowed to file for bankruptcy if there are either assets which can be
>liquidated or if there is the capacity for future wages? correct me
>if i'm wrong - anyone. if this is so, does this mean that bankruptcy
>is simply a means to restructure debt repayments, and that those who
>are not in a position to do so would ... well.. what happens to them?
Under present law, if you can afford the filing fee, anyone can file for bankruptcy. States vary on what and how many assets can be shielded from creditors, but right now there's no means test. People do have the option of choosing chapter 7 (total discharge) or chapter 13 (a repayment program) - but most people choose chapter 7, and most of the chapter 13's fail. When I spent my day watching the proceedings in Manhattan bankruptcy court, I saw about 40 people with incomes ranging from $10,000 to $100,000 a year. All but one - a shady stockbroker with large complex debts - went unchallenged by creditors and had their debts discharged. The trustee asked everyone if they'd used their credit cards to buy luxury goods; everyone said no, and the trustee deployed his rubber stamp. The whole process (at the hearing stage - lots goes on before they reach that point) took no more than 5 minutes. The credit industry wants to rewrite the law so that everyone with above-median income is forced into chapter 13, meaning that wipeouts would be turned into restructurings, and blank slates into repayment programs.
For more than you ever wanted to know about bankruptcy, check out the web site of the American Bankruptcy Institute <http://www.abiworld.org/>, the trade association for "insolvency professionals."
Doug