Many advocates of bankruptcy reform bristle at aspects of the bank-ruptcy system they find distributively “unfair.” These scholars point to the instances in which wealthy debtors have been able to retain million-dollar homes and luxury items, examples which at first glance might of-fend any reasonable sense of decency or fairness. Yet if bankruptcy pro-vides insurance otherwise unavailable because of market failures, then an ideal bankruptcy system would embrace much of this inequality in post-bankruptcy standards of living. The wealthy generally choose private contracts that ensure their high standards of living. Though others envy these benefits, they do not wish to pay the premiums these policies re-quire. To the extent that credit markets force a debtor to pay premiums (in the form of higher interest rates) for the debt relief she would likely receive, forcing all debtors to accept the same standard of living forces each debtor to accept the same Procrustean insurance that is too meager for some and too dear for others. This argument requires strong assump-tions that reasonable minds may reject. If one rejects these assumptions, however, then one must question not only the debt relief secured by up-per-class bankrupts, but also the debt relief offered to the middle class.
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