A Fighting Chance

stayed in the fight however I could: By 1999, there were 1,281,581 personal bankruptcy filings. By 2001 that figure had climbed to 1,452,030. It would reach 1,625,208 in 2003. See American Bankruptcy Institute, http://www.abiworld.org/AM/AMTemplate.cfm?Section=Home&TEMPLATE=/CM/ContentDisplay.cfm&CONTENTID=66471.

National Partnership for Women & Families pitched in, as did the AFL-CIO: Many organizations joined the fight against the industry-sponsored bill and on behalf of consumer protection through bankruptcy. Some of the biggest supporters were AARP, AFL-CIO, the NAACP, the Consumers’ Union, the Consumer Federation of America, the National Partnership for Women and Families, the Leadership Conference on Civil Rights, the National Consumer Law Center, PIRG, the Center for Responsible Lending, and the UAW. These groups played a critical role in fighting for bankruptcy reform that would benefit struggling families.

In addition, the National Association of Consumer Bankruptcy Attorneys (NACBA) was formed in 1992 to serve as a voice for consumer bankruptcy attorneys and protect the rights of consumer debtors and also played an important role.

into their second terms, and they were also ready to help: By taking on the bankruptcy issue, these lawmakers ended up fighting with some of the biggest banks and biggest credit card companies in the country. Senator Durbin mastered the details of the very complex bill, and he was constantly on the lookout for changes that would help families in trouble rather than hurt them. Senator Schumer was an amazing strategist, as his work on the abortion-protestor amendment showed. Senator Feingold and Senator Wellstone actively worked on bankruptcy issues, advocating for the families who needed them. Senator Chris Dodd pushed hard on the point about how bankruptcy helped women (and some men) collect past-due child support and alimony. On the House side, Congressman Jerrold Nadler was an active opponent of the credit industry efforts to weaken bankruptcy, along with Congressmen John Conyers, William Delahunt, and Marty Meehan. Their battles were uphill, but they kept fighting, and my admiration for each runs deep.

three different studies, each of which was touted as “independent”: The number started out as a $400 hidden tax but quickly grew to $550; neither figure had any basis in fact. For the original studies, see Tom Neubig et al., Ernst & Young, LLP, “Chapter 7 Bankruptcy Petitioners’ Ability to Repay: Additional Evidence from Bankruptcy Petition Files,” American Bankruptcy Institute, (February 1998). See also WEFA Group Planning Services, “The Financial Costs of Personal Bankruptcy” (February 1998). See also John M. Barron and Michael E. Staten, “Personal Bankruptcy: A Report on Petitioners’ Ability-to-Pay 1,” Credit Research Center, Georgetown School of Business (1997).

hardworking, bill-paying American family a $550 “hidden tax”: For more discussion, see The Two-Income Trap, 154–55 & nn. 97–99; see also Elizabeth Warren, “The Phantom $400,” Norton Journal of Bankruptcy Law and Practice 13 (2004): 77. According to our analysis, for the $550 statistic to have been true, then the families whom the banking industry was targeting to repay more monies in the bankruptcy courts would have had to have paid $550,000 per household. In our sample of more than two thousand bankrupt families, not one even owed at least $550,000, let alone earned enough money to repay that amount. In other words, the claim that bankruptcy cost every American family $550 was nonsense.

but the press reported it as “fact” for years: For example, see Beth Dixon, “We All Pay Note on House of Cards,” The Commercial Appeal, December 14, 2003. “The American Bankers Association figures that the record number of bankruptcies in 2002 causes American families to pay an additional $400 a year in increased costs for goods and services.” See also Donald Barlett and James B. Steele, “Big Money and Politics: Who Gets Hurt? Soaked by Congress,” Time, May 15, 2000: “Representative Bill McCollum, a Florida Republican who has received $225,000 from the lending industry, upped the ante: ‘Bankruptcy will cost consumers more than $50 billion in 1998 alone. That translates into more than $550 per household in higher costs for goods, services and credit.’”

For more examples and discussion, see Elizabeth Warren, “The Phantom $400.”