While it is unusual for clients to ask whether or not they have a Constitutional right to file a Bankruptcy case, it is a question that occasionally comes up in law firm marketing materials and advertisements. The answer is no, there is no individual Constitutional right to file a Bankruptcy case or receive a discharge of debt. However, there is a legal and statutory right to file, which gets us to the same place.
The “confusion” arises from the fact that Bankruptcy is prominently mentioned in the Constitution. Article 1, Section 8, Clause 4 of the United States Constitution provides:
The Congress shall have Power To…establish…uniform Laws on the subject of Bankruptcies throughout the United States….
This section grants the power to Congress to establish Bankruptcy Courts and and enact uniform Bankruptcy laws. Obviously, Congress has considered the matter and created the Bankruptcy Court system and a set of Bankruptcy laws and we do not have to be concerned that the system will go away. While statutory construction is beyond the scope of this forum, when courts consider the interpretation of laws in court cases, the process is different for laws that may restrict a Constitutional right. For example, if a city attempts to restrict a protest, consideration is given to how such restrictions may affect an individual right to free speech. The same analysis is not used for Bankruptcy laws, as there is no individual Constitutional right involved. To the contrary, when Constitutional issues arise over Bankruptcy issues it is most often due to the Constitutionally limited authority of Bankruptcy Courts and Bankruptcy Judges.
How does this affect someone who needs to file a Bankruptcy case? Not at all. A legal and statutory right has the same affect as a Constitutional right, and there is no need for a Bankruptcy discharge to have a Constitutional stamp of approval. Most of the legal rights we enjoy on a daily basis are statutory rights rather than Constitutional rights, and entire law libraries are filled with these rights (as well as cases interpreting them). Interestingly, another important legal right that many people mistakenly believe is an individual Constitutional right is the right to vote. This does not mean we should view this legal right any less important or valuable.