Question

a. What reason (give one) or justification does the United States give relief to a debtor to not pay their debts? b. What justification (give one) would creditors have against giving relief to debtors? c. How do you see the balance between creditors and debtors in our present Bankruptcy Code? (More in favor of the debtor or the creditors?) Should it change or not? Why or why not? To assist in answering, consider: 1. major reasons for bankruptcy. 2. who is in better position handle the loss of non-payment of the debt -- the debtor or the creditor?

Answer 1

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AS FOR GIVEN DATA...

a) The one reason wherein relief is given to a debtor is when the debtor is able to establish that it is insolvent and won't be able to pay all of its liabilities in time.

b) The creditors can argue that giving relief would set a wrong precedent and would cause a large amount of business loss to the entity.

C) There is more favor for debtors as it allows the debtors to escape from its liabilities even at the cost of creditors taking a hit on themselves. It should definitely change to have a better equitable distribution of risk and reward.

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