Maximizing Wealth by Forgiving Debts: A Critique of Utilitarian Theories of Bankruptcy Discharge

Revue d’études benthamiennes, Volume 15 (2019)

University of Illinois College of Law Legal Studies Research Paper No. 22-02

34 Pages Posted: 18 Nov 2021

See all articles by Ralph Brubaker

Ralph Brubaker

University of Illinois College of Law

Heidi M. Hurd

University of Illinois College of Law

Date Written: July 15, 2019

Abstract

Our purpose in this piece is to critically probe the merits of the utilitarian theory that has dominated the legal literature on personal bankruptcy ever since law and economics came to prominence. As we argue, the utilitarian agenda that is ascribed to the personal discharge doctrines by law and economics scholars who work within the field of bankruptcy law raises both serious normative concerns and uncomfortable descriptive tensions. Together, these problems invite theorists to offer alternative accounts of the conditions under which our legal system provides relief to individuals who find their debts oppressive. In our forthcoming book, The Virtue of Bankruptcy (Oxford University Press), we do just that. Our project here has been to clear the way for that more ambitious project by demonstrating that the utilitarianism that undergirds the most prominent contributions to the literature to date leaves considerable room for improvement when it comes to understanding both why and under what circumstances we should give fresh starts to those who have failed to meet their financial obligations.

Keywords: bankruptcy, creditor, culpability, debtor, discharge, desert, distributive justice, efficiency, externality, forgiveness, fresh start, inalienable, insurance, market failure, moral hazard, paternalist, proximate causation, recklessness, rights, rule of law, stigma, utilitarian(ism), welfare, work

Suggested Citation

Brubaker, Ralph and Hurd, Heidi M., Maximizing Wealth by Forgiving Debts: A Critique of Utilitarian Theories of Bankruptcy Discharge (July 15, 2019). Revue d’études benthamiennes, Volume 15 (2019), University of Illinois College of Law Legal Studies Research Paper No. 22-02, Available at SSRN: https://ssrn.com/abstract=3965764

Ralph Brubaker (Contact Author)

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States

Heidi M. Hurd

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States
2172443446 (Phone)
2172441478 (Fax)

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