Home Legislation and Law

Legislation and Law

Local Loan Co. v. Hunt

Local Loan Co. v. Hunt

It is fairly rare for bankruptcy cases to make it all the way up to the Supreme Court. Nevertheless, some have reached this echelon of the courts and have had all the more influence because of it.
In the instance of Local Loan Co. v. Hunt, the proceedings began simply enough in bankruptcy court. Local Loan took the entire Bankruptcy Act into question, making its corresponding decision of considerable importance to the future of bankruptcy law in the United States. The following are some notes on Local Loan Co. v. Hunt, with particular attention to how the proceedings addressed the Bankruptcy Act:
Local Loan Co. v. Hunt, as with all bankruptcy cases, began with an appearance of a debtor before a Federal court to address his or her insolvency woes. Hunt, the debtor in this instance, borrowed $300 from Local Loan and used a portion of his future earnings as a security against any potential defaults on the loan. However, upon a declaration of personal bankruptcy, this loan was listed as part of the debts to be fully discharged.
Accordingly, Local Loan sought a remedy to this situation in municipal court and sought to file suit against Hunt’s employer to force repayment via his wages as per their initial agreement. In turn, Hunt brought an appeal before the original court hearing bankruptcy cases in the District of Illinois, and as such, the findings of this court invalidated those of the municipal court which had previously ruled in favor of the creditor. Thus, the issue was whether or not the bankruptcy court had jurisdiction.         
In its ruling in Local Loan Co. v. Hunt, the Supreme Court found for Hunt, the debtor, and based its majority ruling to a large extent on the language of the Bankruptcy Act of 1898, most recently amended (at the time) by reform legislation in 1926. Regarding the ability of the bankruptcy court to hear the prior case, the Court put forth the idea that the legality of these proceedings were “well settled.”
More critically, though, the Supreme Court interpreted the very intent of the Bankruptcy Act in deciding whether or not future income could be used as an asset to cover their financial agreement. The Court cited the notion that the purpose of the Bankruptcy Act and filing for relief under it are not to bury debtors under mountains of debt. It further noted that earnings which had not yet been received and therefore did not physically exist could not be collected by creditors following a bankruptcy order, thus affecting which properties may be considered exempt in forthcoming personal bankruptcy cases.

Securities Investor Protection Act

Securities Investor Protection Act

The most notable provision of the Securities Investor Protection Act is the very creation of the Securities Investor Protection Corporation (SIPC). The Securities Investor Protection Corporation was a chief component of the 1970 version of SIPA, and is still in existence today. As the SIPC itself states, it is more than just an entity designed to safeguard investors against the fraudulent practice of brokers.
On a more general platform, the Corporation seeks to return monies to investors – their rightful owners – in the event that the firm to which they have issued their securities goes bankrupt or is similarly in a bad position financially. The most valuable resource the Securities Investor Protection Corporation has in this regard is the SIPC Fund, which is provided for by its members, many of whom are “broker-dealers.”
As for how exactly SIPA impacts and helps consumers, the Act not only establishes the Securities Investor Protection Corporation, but outlines its role at different points in the recuperation process. For one, the Securities Investor Protection Act governs the notice given to the SIPC and the Securities and Exchange Commission (SEC) to intervene on behalf of the disenfranchised investor. This will usually then manifest itself in the Corporation’s petition for a protective decree for the investor made to a court with jurisdiction over these matters, followed by the appointment of a trustee.         
Of course, the privileges offered by the Securities Investor Protection Corporation are not open to all people tied to brokerage firms, and the SIPA also discusses who is and who is not eligible. Generally, as outlined by the Securities Investor Protection Act of 1970, those investors with claims who file in a timely manner relative to court and Federal deadlines and whose claims the trustee acknowledges as legitimate upon review will find they have no problems in securing relief for monies lost. Meanwhile, owners, partners and other major investors in insolvent firms will not be able to collect through the Corporation.
In addition, SIPA mentions limits to which qualifying parties may recoup part or all of their investment. As of the current edition of the Act, up to $500,000 in claims may be covered by the SIPC Fund.  

Servicemembers Civil Relief Act

Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act
(SCRA)
, signed into law by President George W. Bush
in December 2003 and an overhaul of the Soldiers’ and Sailors’ Civil
Relief Act
(SSCRA) of 1940, continues its
legacy of protecting America’s servicemen and women once they return from
a hostile environment. In particular, the SCRA (as opposed to the SSCRA) is
devoted to safeguarding members of the U.S. Armed Forces’ houses while they are
away and after they come back.

 

One such area for which the Act is pretty
explicit is that of leased and rented property. With homes leased prior to
service, servicemembers may be given either latitude to terminate their
agreements with landlords or to be spared eviction within reason.
Servicemembers may also be afforded clemency with regard to foreclosure of
their homes and mortgage payments, especially in the wake of some unforeseen
handicap. Under the SCRA, lenders and landlords who violate these precepts may
actually face jail time for their wrongdoings.

         

The Servicemembers Civil Relief Act
also
touches upon the availability of insurance
to the servicemen and women after the fact. Title IV of the SCRA, for
instance, deals
completely with the subject of life
insurance and ensures that insurers may not decrease the levels of coverage
relative to pre-service amounts, and that those who have served are entitled to
as much as $250,000 worth of coverage on a specific life insurance policy.
Health insurance benefits, too, are referred to by the Act and may be
reinstated in the event of termination as per the language of the law.

         

Servicemen and women may additionally
enjoy the relief offered to them by the Servicemembers Civil Relief Act with
respect to taxes. For taxes that went unpaid as a result of military service,
debtors may appeal for a stay on collection acts, including sale of property to
offset monies not yet received, as well as reinstatement of property rights in
the event of
a wrongful sale. Plus, the delay of income tax
filings may be put off by up to 6 months, and thus, not indefinitely. In all
cases, there are limits to what the SCRA can do for American soldiers.

Bankruptcy Reform Act of 1978

Bankruptcy Reform Act of 1978

While bankruptcy law in the United States has seen its share
of revisions over time, none may be as significant as the Bankruptcy Reform
Act of 1978. One of the biggest reforms of the Bankruptcy Reform
Act is what it did to the
 bankruptcy court. 

The Bankruptcy Reform Act of 1978 is recognized for
enacting many important “firsts” that are critical to bankruptcy
petitions today. Of course, going back to the foundation of bankruptcy courts, new
bureaus to hear bankruptcy cases would mean new offices and officers would have
to be established to populate these courts and make sure the proceedings would
run smoothly.

One critical addition made by the Bankruptcy Reform
Act to bankruptcy law was to institute the U.S. Trustee Program. As of
1978, only 18
Federal districts were represented by trustees. However, today all
districts except those in North Carolina and Alabama (mediated by bankruptcy
administrators) employ
 trustees. 

In addition, the Bankruptcy Reform Act of 1978 saw the
inclusion of new types of bankruptcy to the Code. For the solace of individual
debtors, a personal bankruptcy option was forged from prior policies,
encompassing what is now known as Chapter 13 individual debt readjustment. Meanwhile,
corporations were afforded a choice apart from liquidation to reconstitute as
well, and as a result of the Bankruptcy Reform Act, are protected by
 Chapter 11 business reorganization.