Bankruptcy and the Myth of 'Uniform Laws'
88 Pages Posted: 7 Dec 2011 Last revised: 11 Jul 2012
Date Written: December 2011
The Bankruptcy Clause of the Constitution empowers Congress to enact “uniform Laws on the subject of bankruptcies.” Common definitions of the word uniform include “always the same” and “not variable.” Yet the rights and remedies of debtors and creditors in a bankruptcy case vary significantly depending upon the state and federal jurisdiction in which the case is filed. Rather than a single uniform law of bankruptcy, the U.S. has multiple bankruptcy laws and regimes based upon geography.
The cause of bankruptcy non-uniformity lies in the structure of our bankruptcy system. Many sections of the Bankruptcy Code incorporate state law, which frequently differs from state to state. In addition, case precedent is divided over fundamental bankruptcy issues. Finally, local bankruptcy courts and trustees have established their own rules and policies. Together, this has effectively created as many bankruptcy fiefdoms as there are bankruptcy districts.
This Article examines the lack of uniformity in U.S. bankruptcy practice in light of the constitutional requirement of uniformity. It seeks to establish a definition of constitutional uniformity by examining uniformity under the taxing, naturalization, and bankruptcy powers. The Article concludes that the lack of uniformity in our present bankruptcy system is bad policy, and in many respects, is unconstitutional.
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