San Diego Law Review

Library of Congress Authority File


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There is a staggering number of consumer bankruptcies being filed in the United States today. It is generally believed that this is an unavoidable corollary to the upsurge in consumer credit, and that consumer credit, in turn, is the bulwark of our modern economy. Assuming the validity of these conclusions, the best method of dealing with the consumer who is unable to pay his debts remains unsettled. Unknown to many attorneys, two statutory remedies exist under federal bankruptcy law. The first, straight bankruptcy, is widely used; the other, Chapter XIII Wage Earner Plans, is essentially ignored. It is the position of this Note that a substantial percentage of straight bankruptcies could and, from the standpoint of the debtor’s best interest, should be filed as Wage Earner Plans. Furthermore, by filing straight bankruptcies where Wage Earner Plans should be utilized, numerous attorneys are being derelict in their duty to safeguard their clients’ interest. This dereliction is a result of several factors–lack of knowledge in the legal community about Wage Earner Plans, fallacious conclusions as to the advantages of straight bankruptcy, and administrative hindrances in the operation of Wage Earner Plans. A survey of possible alternatives will demonstrate that the Wage Earner Plan, if improved, would be the best solution to the problem of consumer bankruptcy.

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