The Scope of the Fresh Start in Bankruptcy: Collateral Conversions and the Dischargeability Debate

Abstract

This article examines the proper scope of the financial fresh start provided an individual debtor by the discharge in bankruptcy. The legal effect of the discharge is powerful in its simplicity: the debtor is freed from the obligation to pay prebankruptcy debts. A difficulty lies, however, in determining what the parameters of the fresh start policy should be. This article explores the problem in the context of a specific issue: the dischargeability of debts arising from conversions by the debtor of a secured creditor’s collateral.