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- Title
Friend or Foe? The Government's Split Mission in Consumer Bankruptcy Cases.
- Authors
CONSTANTIN, STEVEN M.
- Abstract
The consumer bankruptcy system in the United States seeks to advance dual objectives: facilitating creditor collections and providing relief for the downtrodden debtor who has no other financial respite. In most consumer bankruptcy cases, the creditor's only objective is the maximum recovery of property owed to it by the bankruptcy estate. However, in situations where the government is the creditor, there are competing social and economic goals that should influence the government's behavior toward debtors that seek to protect certain assets under the bankruptcy code's property exemptions. With one in ten individuals filing for bankruptcy in their lifetime, agencies such as the IRS, which often finds itself as creditor, have an obligation to consider the bigger picture surrounding the bankruptcy system other than just collection due to their unique positions as government actors. This Recent Development seeks to explore the implications of the Fourth Circuit's ruling in Copley v. United States, where the IRS sought to collect unpaid taxes by offsetting a married couple's federal tax return, which they had sought to safeguard in bankruptcy through property exemptions. In deciding that the IRS's authority to collect delinquent tax debts superseded the debtors' rights to exempt their tax return, the Fourth Circuit laid the foundation for problematic outcomes for low-income individuals and contract workers. Ultimately, the Fourth Circuit failed to recognize the unique position of government creditors in consumer bankruptcy cases and their obligations to consider countervailing social and economic objectives.
- Subjects
PERSONAL bankruptcy; DEBT relief; DEBTOR &; creditor; TAX returns; TAX exemption; UNITED States. Internal Revenue Service; UNITED States. Court of Appeals (4th Circuit)
- Publication
North Carolina Law Review, 2022, Vol 100, Issue 6, p1809
- ISSN
0029-2524
- Publication type
Article