Judge George Paine, the former Chief Judge for the Middle District of Tennessee, speaking particularly about Chapter 7, described Bankruptcy as “an extraordinary process that can relieve the debtor from oppressive financial obligations.” As stated in American Bankruptcy Cases for over 100 years, the policy goal of consumer bankruptcy law (which includes both Chapter 7 and Chapter 13) is to provide a financial fresh start to the honest but unfortunate debtor.

Why does our national society (United States of America) through national bankruptcy law, as well as the separate individual states through state property and exemption law, have a system which accomplishes this objective of giving its residents an opportunity for a “fresh start” financially? And why do we allow them not only to obtain this “fresh start”1, but also allow them to keep a certain amount of property in order to have something to build upon for the future?2 In a word, “Mercy.”

Our society, through its elected representatives, expresses its compassion and mercy towards those among us who are “stuck between a rock and a hard place.” And we want them (those honest unfortunates) to be able to get “back on their feet,”3 without “taking the shirt off their back.”4

Often my potential clients are “stuck between that rock and a hard place” and they have no other place to go; Bankruptcy Law provides that way out- that Sanctuary- that Reprieve- that Mercy. What a wonderful thing. I feel privileged to assist debtors in obtaining the maximum mercy available to them under law, and helping them create a fresh start financially for themselves and their families.

Most areas of law are all about Justice. For example, a person commits a crime, and then found guilty, they are expected to “pay a debt to society.” (Sometimes involving restitution.) Likewise, if a person is innocent of a crime, it would be “unjust” to find them guilty, and that is not a matter of mercy, but rather justice. Though sometimes, a criminal defendant may “throw himself on the mercy of the court,” but that is where they are seeking mercy from the criminal code at sentencing (the mercy sought is not in the code itself).

In personal injury tort claims, if a party negligently or recklessly injuries another in a car accident, then that negligent or reckless person needs to make that other party whole by paying their damages. (We pursue this type of justice for our personal injury clients.) Basically, in most all areas of law, when a person subtracts from the property or well being of another person or persons, or from the legal order of society, then that person is obligated to pay back what that person took in some fashion, to the extent that person can in our “Justice” system. But here, in Bankruptcy Law, we balance the Justice owed to the creditors, with Mercy for the honest debtor. This additional aspect of Mercy makes bankruptcy a unique and extraordinary area of law.

Justice is certainly a noble end; but so is Mercy. In Bankruptcy law, we attempt to find the right balance between Mercy and Justice.5 Sometimes, there is simply no more Justice to squeeze out of that debtor struck between a rock and a hard place; in that case, Mercy!

There is a cost to this, as there are no free lunches. We all pay for the cost of Bankruptcy in our economy as it is included in the cost of credit. In all contracts, there is the possibility that one of the parties may become insolvent and file for bankruptcy, and that cost/risk is built into the contract and into the American economy because we have a civic sense of mercy for our neighbors who are “caught between a rock and a hard place.”

FN 1. In exchange for just telling the truth to the Bankruptcy Court, something they should presumably be doing in any case.

FN 2. For example, in Tennessee, you can keep up to $10,000.00 in personal property, an unlimited amount in a 401k for retirement, and an unlimited amount of clothes and wearing apparel. We call these “exemptions” as they constitute property which is “exempt’ from your creditors.

FN 3. Justice Story in his Commentaries on the Constitution: “The system of discharging persons, who were unable to pay their debts, was transferred from the Roman law into continental jurisprudence at an early period. To the glory of Christianity let it be said, that the law of cession (cessio bonorum) was introduced by the Christian emperors of Rome, whereby, if a debtor ceded; or yielded up all his property to his creditors, he was secured from being dragged to gaol, omni quoque corporali cruciatu semoto; for as the emperor (Justinian) justly observed, inhumanum erst spoliatum fortunis suis in solidum damnari; a noble declaration, which the American republics would do well to follow, and not merely to praise.”

FN 4. The law of exemptions is a historically recent development in the history of Bankruptcy and Insolvency Law; a history which goes back to the Israeli Torah/Old Testament concept of forgiving debts of the fellow citizens of Israel every 7 years. See Deuteronomy 15:1-2: “At the end of every seven years you shall grant a remission of debts. 2. This is how it is to be done: Every creditor shall cancel any loan they have made to a fellow Israelite. They shall not require payment from anyone among their own people, because the LORD’s time for canceling debts has been proclaimed.”

FN 5. I was attracted to the compassion inherent in debtor representation when I came upon it after law school, but I first realized the Justice/Mercy angle in Bankruptcy Law in reading an article by Matthew B. Tozer and Ben E. Lofstedt at http://www.christian-attorney.net/bible_bankruptcy.html . This concept of balancing “justice for creditors” with “mercy for the honest debtor” was reinforced through practice and study of consumer bankruptcy law.