Tennessee Lawyer Challenges Constitutionality of New Bankruptcy Law

In just the short time since the BAPCPA amendments became effective, there have been many legal challenges to the law’s provisions - some successful, some failing (usually for lack of standing - a legal principle stemming from the U.S. Constitution that ensures the person pressing a claim has a sufficient stake in its outcome). However, a lawyer in Tennessee has pressed an argument that many consider novel, and promises to be a fascinating case to watch.

Chattanooga lawyer Tom Ray has filed a case on behalf of his clients that argues that the median income provisions which determine eligibility for Chapter 7 protection violate the federal Constitution (most likely the Equal Protection clause, although that isn’t stated specifically in the source article).  The gist of Mr. Ray’s argument is this:

• The new law compares a debtor’s income to the state’s median income for a household of the same size - figures compiled from each state.
• The median incomes for the same household size will vary widely between different states, depending on a complex array of factors.
• Thus, it is possible (even likely) that there could be two debtors similarly situated in every way, except for the state of their residence, one of whom would be eligible for Chapter 7 and the other of whom would not.
• That disparate treatment of two identical debtors would be constitutionally impermissible.

Whether it will succeed or not, it’s good advocacy on behalf of Mr. Ray’s clients. I’m waiting to see how this one will turn out, with great interest.
Source: Chattanooga Times Free Press

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