What are Bankruptcy Loopholes?
If you are considering personal bankruptcy , you might have come across talk of bankruptcy loopholes and you may be wondering what those could be. According to the Oxford English Dictionary, a loophole is “an ambiguity or inadequacy in the law or a set of rules.” More colloquially speaking, a loophole is a term that is sometimes used in the law to refer to a way of avoiding or evading a particular law or the specific language in a statute. Bankruptcy loopholes, as such, are ways that some people have been able to prove eligibility for Chapter 7 bankruptcy even though they should not actually have been able to pass the means test, for example. There are other kinds of bankruptcy loopholes for both consumers and business owners, but we want to focus on the ways in which bankruptcy loopholes unfairly benefit some consumers while leaving others without the ability to file for Chapter 7 bankruptcy. As you may know, Senator Elizabeth Warren’s recently proposed bankruptcy reform legislatio...