A Fighting Chance

A Thousand Cuts

The commission’s vote may have made it seem that the country’s families had won, but our side wasn’t celebrating. The banking industry had already found another way to push for what it wanted.

Months earlier, as it was becoming increasingly clear that Judge Jones and her allies might not get a majority vote to recommend overhauling the bankruptcy code, the banks opened a second front in the war. Instead of waiting for the commission’s report, the industry wrote its own version of a bankruptcy bill and then shopped it around to some friendly members of Congress. The bill was introduced in September 1997—one month before the commission’s deadline. By the time the commission delivered its report, the industry-backed bill was already in play.

The strategy was very effective. By beating us to the battlefield, the banking industry had more success at defining the terms of the fight. In their version of the world, Congress could support either “honest people who pay their bills” or “people who skip out on their debts.” There wasn’t any room to talk about rising health care costs or lost jobs. There was just a black-and-white question about people in financial trouble—do you pay your bills or don’t you?

The industry didn’t propose to eliminate bankruptcy protection altogether. After all, the Founding Fathers had called for bankruptcy protection in the Constitution itself, and surely even the banking lobby wouldn’t pick a fight with them. But they did propose changes—stacks and stacks of changes. Most of the proposed revisions were exceedingly complicated, and those complications worked to their advantage. The complex twists and turns of the recommended changes made it hard for the press or the public to follow, which provided great cover for what the banking industry was really trying to do. (Years later, I saw this move during the bank bailout: banks hid behind jargon and gibberish, deliberately making everything sound more complicated than necessary so they could avoid public scrutiny.)

The ultimate impact of those hundreds of changes in the industry-backed bill would be to make it harder for struggling families to get bankruptcy relief. It would become more difficult to discharge debts and more expensive to get help from a lawyer. There would be more paperwork, more hoops to jump through. It would become harder for people who were struggling to get relief from student loans. The bill also made it tougher for single parents to collect back child support from an ex who was buried in debt. (For decades, the bankruptcy laws had given special consideration to the needs of single parents, but now the credit card companies wanted to elbow them aside to get whatever money their ex had left. That one still makes me grind my teeth.) Meanwhile, the new legislation would make it easier for bill collectors to harass people forever.

In so many ways, the industry-supported bankruptcy bill would make life worse for families in trouble. It stunk like a pile of manure.





A Champion for the People

The National Bankruptcy Review Commission’s work was over, and I went back to spending most of my time on teaching and research and going back to Oklahoma to be with my brothers. The commission’s report seemed forgotten within weeks, and the banking lobbyists looked unstoppable.

But I couldn’t just walk away. More than a million families were now seeking bankruptcy protection every year. So I stayed in the fight however I could. I started new research projects. I talked with consumer advocates. I gave speeches to judges and lawyers. Sometimes I got a call from the press, and I tried to explain what was at stake.

A few heart-of-gold allies took up the fight. Nonprofit advocacy groups like Consumer Federation of America and Consumers Union joined the cause. A group of lawyers built a small advocacy group, and the National Partnership for Women & Families pitched in, as did the AFL-CIO. But resources were already stretched thin, and each of these groups had a host of other battles they were fighting on behalf of their members. As far as I know, there wasn’t even one full-time paid staffer on our side in the bankruptcy fight.

For months, we were so outgunned that we seemed to have no chance. It was as if we were shouting in the wind and no one could hear us. And then, just when it seemed like it was all over, we found a champion.