Bankruptcy and Wage-earners
This has nothing to do with politics or Trump, but with an opinion we discussed about bankruptcy. You have not taken bankruptcy nor have I.
However, bankruptcy as a safety net came about for good reason. Debtors’ prison cost the State and eliminated the productivity of the debtor. Similar thinking promoted bankruptcy as an encouragement to risk taking, in developing big things, or new innovation. Many of us have great ideas, but we lack the courage or desire to take on all that may be required and the risk. Some still see bankruptcy as evil but more likely seek a contract from which the contractee has no escape. Subprime mortgages or student loans for example. That said, some people thing that bankruptcy as a safety net is a good thing for development and the economy.
As for wage earners, I looked this up because of our conversation. I did not believe wage earners were at risk from high stakes bankruptcy only the big guys like banks and investors who should know the risks.
“After bankruptcy, most debtors remain insolvent. The Bankruptcy Code therefore needs to establish rules for the distribution of the inadequate pie—how big a slice does each claimant receive, and in what order of priority does it receive that slice, before the pie disappears? The order of claims in bankruptcy is governed by what’s known as the absolute priority rule. In general, the Code provides that secured creditors are entitled to receive the entire value of the collateral securing their claims up to the full amount they are owed. Unsecured creditors, then, get to look to any remaining assets of the estate. But not all unsecured creditors are treated the same. Rather, the Code grants priority in right of payment to some.
The order of claims in bankruptcy starts with creditors who provide services or goods after bankruptcy is filed. Creditors whose claims arose after the debtor filed for bankruptcy, for the actual and necessary costs of preserving the estate—usually have first priority. Other creditors whose claims Congress deemed especially “worthy” are then afforded different levels of priority. For example, certain employment-related claims for wages,benefits or the like, up to specified dollar limits, are entitled to payment before other unsecured claims are paid. Certain tax claims, though junior in the priority waterfall to the employment-related claims, are also entitled to priority over most other unsecured claims.” From Google
Trivial, but our discussion picked my curiosity over what I thought I knew. My book and the research dealt with some of this in an unpopular suggestion that some student loans be forgiven, those in default with the debtor unable to work lest all his or her wages be garnered. Unfortunately it would be the taxpayer, not the bank making near fraudulent loans to minors that would pay. Oh well.