Recent bankruptcy cases are exposing a problem. Affluent individuals filing for bankruptcy are treated more favorably under the Bankruptcy Code than those debtors with little to no means of financial sustenance or income. Did Congress intend this result? The legislative history is unclear. But one thing seems certain: The United States Bankruptcy Code contains a set of loopholes that appear to be designed for the well-to-do segment of society. Courts throughout the United States are either overlooking these provisions or simply condoning their utilization under the defensible conviction that the Bankruptcy Code permits it.
In this Article, I argue that the Bankruptcy Code unfairly discriminates against individuals of lower-class economic status. Specifically, I identify two loopholes—one found in Chapter 7 and one located in Chapter 11—that are arguably intended to benefit those with high incomes and significant assets. Courts need to consider whether the use of these loopholes is permitted under the Code, and if so, how they should be addressed in individual bankruptcy cases. The Bankruptcy Code should create a level playing field for debtors—not an oasis for the affluent.