An Alternative Approach to the Treatment of Penalties and Fines in Bankruptcy
AbstractCurrently, penalties and fines are not provable in bankruptcy. This article examines the policy behind this approach and its consequences. It then suggests an alternative approach where penalties and fines are provable, but are subordinated to other unsecured debts and are not released upon the discharge of the bankrupt. Although this approach is not perfect, it addresses some of the difficulties of the current approach and balances the goals of protecting the bankrupt from pressure by creditors during the term of their bankruptcy, deterring and punishing misconduct, and giving the bankrupt a ‘fresh start’ upon their discharge.
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