Slavery and Bankruptcy in America

By Professor Rafael I. Pardo, Robert T. Thompson Professor of Law, Emory Law (Atlanta, GA)

Summary/Commentary

By Phil Lamos, Chief Legal Counsel, Office of the Chapter 13 Trustee Lauren A. Helbling (Cleveland, OH)

Slavery and Bankruptcy in America – Summary

Professor Rafael Pardo has written an extensive and fascinating article to be published in an upcoming Vanderbilt Law Review. He has given us a sneak peek.

Professor Pardo specializes in bankruptcy and commercial law, is an elected member of the American Law Institute and has testified as a bankruptcy expert before both houses of Congress.  In 2015, he received the Emory Williams Distinguished Teaching Award, the highest university honor for teaching given by Emory University to a full-time faculty member in recognition of a record of excellence in teaching.

Slavery and Bankruptcy in America discusses the passage by Congress of the Bankruptcy Act of 1841 which was a momentous occasion in the nation’s Bankruptcy history. The Bankruptcy Act of 1841 was one of the earliest attempts by Congress to regulate and legislate the Bankruptcy process, and it was the first piece of Bankruptcy legislation which allowed individuals to seek bankruptcy relief voluntarily, rather than having it forced upon them by their creditors. Important as this piece of legislations was, it led to one of the darkest periods in the nation’s Bankruptcy history. For a brief period of time in the middle of the nineteenth century, the federal district courts of this country, as part of their jurisdiction over the Bankruptcy process, managed and oversaw the sale of slaves.

Under the Bankruptcy Act of 1841, if a jury found that a debtor was entitled to bankruptcy relief, the Court would issue an order requiring the U.S. Marshalls to gather all of the debtor’s nonexempt assets and deliver them to a court-appointed receiver. This court-appointed receiver would sell the assets with the proceeds going to the bankrupt’s creditors. As we are painfully aware, in the South before the Civil War, one such possible asset would have been a debtor’s slave holdings. Court-administered slave sales took place from New Orleans to Richmond, with thousands of slaves being sold in court-administered liquidations arising in cases filed between 1841 and the repeal of the Act in 1843. Slaves who had been seized by the U.S. Marshall were jailed until they could be sold. The standard Bankruptcy forms and schedules of the time had a place for a debtor to list slave holdings, and even the rights to recapture slaves who had run away and could not be located were subject to auction.

Per Professor Pardo’s research, and history as we know it, slavery was an entrenched part of the antebellum South’s financial and cultural structure.

Professor Pardo’s article concludes that we must never forget that the 1841 Act, the forbearer of modern bankruptcy law, caused great harm and suffering to bankrupt slaves.

****************************************************

Doing the Unpleasant Parts of the Job – Commentary

Reading this article, makes one wonder if someone, somewhere charged with conducting and/or administering these bankruptcy cases found the sale of human beings abhorrent? Yet the sales went forward.

In today’s bankruptcy courts, of course, no one sells human beings. But how do we do the things that are a necessary component of our jobs, but that we find repulsive? Maybe what we find repulsive is something that we can all agree is difficult, like moving to dismiss the case of the sweet old lady who hasn’t made a plan payment in six months or objecting to a motion for a hardship discharge filed by a deserving debtor who hasn’t yet paid as much to their unsecured creditors as they would have received in a Chapter 7. Perhaps it is something on which seemingly reasonable minds may disagree, like the administration of cases filed by same-sex married couples.

One could say that we do these things because we’re paid to do them, but I think we’re more sophisticated than that. Unlike the selling of humans, I think we do them because we all recognize that doing these distasteful tasks serve a purpose larger than any one particular case. We are the protectors of the Bankruptcy system, and protecting the integrity of the system sometimes means doing things that we might find repugnant or hard to swallow. We have responsibilities to all parties involved, creditors as well as debtors, and while our heart might bleed for the sweet old lady, we have obligations to the creditors as well and it’s not within our purview to favor one over the other. Allowing the sweet old lady who’s not paying to stay under the protection of the Bankruptcy Code is not fair to the debtors who are paying (and it drives up costs for all debtors as well), so honoring our responsibilities to the system as a whole requires us to move to dismiss the cases which are failing, no matter our feelings. Giving a break to (or punishing) someone because of our particular ethics makes it okay for someone else to give a break to (or punish) someone because of their particular ethics, and eventually rules and laws have no meaning.

Sometimes our jobs are not easy. Sometimes we are forced to do things that we might think are repellant. But as odious as we might find these tasks, the only way the Bankruptcy process succeeds for all parties involved is if we carry these tasks out fairly and efficiently.

__________________________

pardoProfessor Rafael Pardo specializes in bankruptcy and commercial law, and his scholarship has been published in numerous law journals, including the Alabama Law Review, the Iowa Law Review, the Florida Law Review, the UCLA Law Review, the Vanderbilt Law Review, the Washington Law Review, the Washington and Lee Law Review, and the William and Mary Law Review.

Professor Pardo received his JD from New York University School of Law, where he served as an executive editor of the New York University Law Review and was a recipient of the Judge John J. Galgay Fellowship in Bankruptcy and Reorganization Law.  He is an elected member of the American Law Institute and has testified as a bankruptcy expert before both houses of Congress.  In 2015, he received the Emory Williams Distinguished Teaching Award, the highest university honor for teaching given by Emory University to a full-time faculty member in recognition of a record of excellence in teaching.

Education: JD, New York University School of Law; BA, Yale College

__________________________

IMG_2424Phil Lamos has been an attorney for the Chapter 13 Trustee since 1997, and has been the Trustee’s Chief Legal Counsel since 2003. A graduate of John Carroll University and the Cleveland-Marshall College of Law, Phil lives in Painesville, Ohio with his wife, son, and daughter.

No Author Biography has been linked to this Article.

Related Articles

DeCarlo01
October 2, 2022
So, what happens to post-petition appreciation of assets during a Chapter 13? Does the Debtor get to keep the money? Or does the Chapter 13 Trustee get it for the benefit of creditors? That was the question for the Court in In re Klein, 2022 WL 3902822 (Bankr. D. Colo. 2022). The question in Klein is a bit different than...
Members
rmichaelsmith
September 18, 2022
As we observe the growing discussion over the tremendous amount of outstanding student loan debt, several points of clarification might do us well. There are those favoring relief for debtors now unable to pay their student loans. They have proposed various forms of relief, including several forgiveness programs and re-allowing such debts to be discharged in bankruptcy under more usual...
Members
kevinanderson
June 26, 2022
Consumers have burned through their stimulus cash and are now drawing down their savings to satisfy pent up spending sprees and to cover the increasing cost of living. This cannot continue. From 2015 through the end of 2019, consumers held a consistent average of $1.1 trillion in savings. However, with the commencement of the COVID pandemic and the first of...
Members
December 6, 2020
By Scott F. Waterman, Chapter 13 Standing Trustee for the Eastern District of Pennsylvania (Reading) Modifying a first mortgage is one of the most common loss mitigation tools available to bring a loan current to prevent foreclosure. In this case the first mortgage was modified twice by capitalizing the unpaid interest, reducing the interest rate, and reducing the monthly payments...
July 7, 2019
By Robert B. Branson and Tammy Branson, Branson Law PLLC (Orlando, FL) On June 10, 2019, Chief Judge Michael Williamson entered Administrative Order 2019-1 Prescribing Procedures for Student Loan Modification Program “SLP” in the Middle District of Florida, which goes into effect August 1, 2019. The SLP Program was a district-wide effort created with input from all three divisions of...
Members
William-1_print_2019
Selected Consumer Opinions Since January 1, 2022 Automatic Stay Denial of stay relief was final and appealable, although it was “without prejudice.”Deciding an issue not addressed in Ritzen Grp., Inc. v. Jackson Masonry, LLC, 140 S.Ct. 582 (2020), the Ninth Circuit concluded that the bankruptcy court’s order denying stay relief was final and appealable, despite its “without prejudice” language, because...
Members
January 31, 2021
By Rachel Jones, Staff Attorney to Chapter 13 Standing Trustee Chris Micale, Western District of Virginia (Roanoke) The events of 2020 have had a devastating impact on the very low-income population. The working poor are struggling, particularly those working in sectors such as hospitality and tourism. State and Federal funding and local programs such as food banks and community action...
moran_cathy
June 11, 2023
Hands up everyone who has encountered a claim that a debt is non-dischargeable by reason of § 523(a)(14). That’s what I thought: nada, or next thing to it. Despite watching for it, I hadn’t seen one ‘til this year when AmEx filed an adversary in a case in which I was peripherally involved. My copy of Collier’s code doesn’t comment...
Members
Judge Corbit
January 14, 2024
Bankruptcy Judge (E.D. Washington) serves up classics with wooden tennis racket collection.
November 10, 2019
By William Houston Brown, Editor and Adviser, NACTT Academy for Consumer Bankruptcy Education, Inc. Several Official and Director’s Forms related to bankruptcy filings are revised and some are new, with some already taking effect on October 1, 2019, others to take effect December 1, 2019, and others taking effect February 19, 2020. Several forms have already been updated on April...
Members

Looking to Become a Member?

ConsiderChapter13.org offers a forum to advance continuing education of consumer bankruptcy via access to insightful articles, informative webinars, and the latest industry news. Join now to benefit from expert resources and stay informed.

Webinars

These informative sessions are led by industry experts and cover a range of consumer bankruptcy topics.

Member Articles

Written by industry experts, these articles provide in-depth analysis and practical guidance on consumer bankruptcy topics.

Industry News

The Academy is the go-to source for the latest news and analysis in the Chapter 13 bankruptcy industry.

To get started, please let us know which of these best fits your current position: