The Virtue of Consumer Bankruptcy

Heidi M. Hurd and David C. Baum

in A Debtor World

Published in print October 2012 | ISBN: 9780199873722
Published online January 2013 | e-ISBN: 9780199980000 | DOI:
The Virtue of Consumer Bankruptcy

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This chapter lays out the foundations for a new positive theory of the consumer bankruptcy discharge that better coheres with common normative commitments and more persuasively explains doctrines that centrally define and limit today's right of discharge. It argues that our practices of debt-forgiveness are not about maximizing aggregate welfare, or about protecting individual rights, or about spreading wealth so as to achieve a more just distribution across society. Rather, they are about achieving and expressing personal virtue—not that of creditors or of debtors but of ordinary people, as citizens of a just and wealthy society. In short, the bankruptcy system is about the people, it is not about them; it is an institution required by persons of good character who live in a world of scarce resources with others of variable talents, dispositions, opportunities, and luck. It reflects the aggregation and coordination of the demands of the best “aretaic” theory—the best theory of what it means to be a person possessed of sound moral character within a society of unequally distributed benefits and burdens. When debtors are rightly forgiven, it is under circumstances in which all those to whom their debts are owed ought to forgive their debts, and all those to whom the costs of their default are passed ought to be willing to shoulder those losses.

Keywords: consumer bankruptcy discharge; debt; debt-forgiveness; personal virtue; bankruptcy system

Chapter.  9362 words. 

Subjects: Company and Commercial Law

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