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The Sea Change from Bankrupt to Debtor, and the 2005 Amendments

By Joseph McDaniel, Esq.

There aren't a lot of Arizona Bankruptcy Lawyers who can use the word "bankrupt" without wincing; that's because they've only worked under the New Code, instead of the Old Act.

I was privileged to work on cases still in progress under the Old Act, so I like to say "bankrupt" just to let the young whippersnappers wince and think about trying to correct me.

I'm easily amused.

But the language of the Bankruptcy Code (which was at one time "the Chandler Act", so when I say my middle name is bankruptcy, I'm not far off!) has shifted a good deal over the period of my practice, and in ways that make me sad.

For one thing, there's now a dangerous presumption of abuse built into the Code, since 2005; I hate that, because Americans are fundamentally honest, and I've only had at most a half dozen clients over the last thirty years who had larceny in their hearts.

For another thing, even though I filed a zillion Chapter 13 Bankruptcy cases under the New Code when it was New, the Chapter 13 statutes are now missing my favorite word: Superdischarge.

That was a very useful tool! Especially when creditors got uppity, and filed a Complaint to Determine Dischargeability of Debt.

One of the positive changes that survived The BARF Act of 2005 was the use of the word "debtor" to describe the person or entity filing the bankruptcy petition.

The older word (dating from Venice in the Middle Ages, when money changers who couldn't pay their debts had their benches broken, and were therefore called "banca rupta": Italian for broken bench) was considered to have a stigma by the drafters of the New Code, so they used the phrase "debtor", which they considered nicer.

I really wish they'd used an entirely different word, because there are confusions in computer researching the law of secured transactions, which also employs the word "debtor", but except for that, the choice of the word "debtor" in place of "bankrupt" was not a decision.

But I still wish they'd used "rutabaga" instead of either "bankrupt" or "debtor".

The only confusions would have been with cookbooks, not law books.

Full post as published by Arizona Bankruptcy Attorney Blog on January 03, 2011 (boomark / email).