Changing definitions of fresh start in U.S. Bankruptcy law

Consumer bankruptcy law in the United States has been distinguished by its commitment to the fresh start concept, enabling the debtor to discharge indebtedness and begin a new economic life. In this paper recent developments respecting four important limitations on the scope of the fresh start are examined. The four limitations are: (1) the debtor must give up non-exempt property; (2) in some parts of the country debtors are effectively required to complete 3 to 5 year debt repayment plans (called Chapter 13 plans) before receiving a discharge; (3) certain debts are "excepted" from discharge; and (4) many rights of secured creditors in collateral are preserved despite discharge. The author concludes that, with respect to the first three limitations, debtor's rights have been restricted over the past 15 years approximately. In the conclusion possible reasons for these restrictions in scope of the debtor's fresh start are discussed. The author discusses the tremendous increase in consumer bankruptcy filing rates in the United States but concludes that the best evidence indicates that increased filings are not a good reason to restrict the scope of the fresh start. He suggests that one important factor for increasing limitations on the fresh start has been a reduced political commitment to values that historically have justified the granting of a discharge to consumer debtors. © 1997 Kluwer Academic Publishers.