A Fighting Chance

In the late spring of 2005, the families who needed help from strong bankruptcy laws finally ran out of luck. The House and the Senate passed the industry-backed bankruptcy bill by lopsided majorities, and President Bush signed it into law.

A few months before the vote, Faith, who had been a gift from my students so many years earlier, died. After that I said to Bruce, “No more dogs. It hurts too much when they die.” Bruce hugged me and didn’t say much. But that summer, he came home with Otis, a golden retriever puppy with huge feet whose first act was to stagger into the house, find an air-conditioning vent, and flop down on top of it. Otis was born ready for a nap.

Okay, so Bruce was getting a dog. I announced that I was fine with this, but I would not fall in love. (Yeah, right.)

The changes to the bankruptcy law were set to go into effect in the fall of 2005. That year, more than two million families raced to the bankruptcy courthouse, afraid they would lose their last, best chance at protection. Sure enough, the minute the amendments to the law kicked in, bankruptcy filings dropped sharply. And the credit industry got what it wanted—less help for families in trouble.

No single change made the difference. Instead, it was death by a thousand cuts. The law got more complicated. The paperwork multiplied. Single mothers got less help, and they had a harder time collecting past due child support. Filing fees went up. Some people were still eligible for relief, some people weren’t. Some debts could be discharged, some could not. Some lawyers quit the practice of bankruptcy altogether, and those who stayed in the business often charged more—sometimes a lot more—to navigate the more complex law. There were hundreds of changes, some big and some small, but every change tilted in the same direction: Squeeze the families in trouble and increase the profits for big banks, credit card companies, car lenders, and a slew of other very successful businesses.

The banks also won an important public relations coup. After the changes to the law went into effect, a lot of people thought bankruptcy protection had been eliminated altogether. Many families figured there wasn’t any help for them, no matter how much trouble they were in. Debt collectors advanced this notion, telling people that bankruptcy was now “illegal” or that they would be audited by the IRS if they tried to use bankruptcy to clear their debts. It was a lie, but to someone who wasn’t an expert in the law and who was getting harassed by debt collectors, it probably sounded like the truth.

So what happened to the hundreds of thousands of people who might have filed bankruptcy each year but didn’t? No one knows for sure. Some may have regained their footing, although with their huge debts it’s hard to see how. Some pulled the belt even tighter, gave up health insurance, or stopped taking their kids to the doctor. Some disconnected their phones in a desperate attempt to avoid harassing calls from debt collectors. Some people moved to the underground economy, working for cash so their wages couldn’t be garnished. Some missed the chance to catch up on mortgage payments and lost their homes. Some gave up their dream of getting a college degree. Some single mothers lost hope of receiving their past due child support from their bankrupt ex-husbands and moved in with family or fell into bankruptcy themselves. And some people shut down their small business, because without a fresh start the business no longer had a chance to survive.

On good days, I reminded myself that our fight to protect America’s middle class had held off the banking industry for nearly a decade. From the day President Clinton appointed Mike Synar to launch the National Bankruptcy Review Commission to the final passage of the bill, millions of families had gotten some relief from their debts. On bad days, I admitted that right from the beginning, the game was so rigged that working families never had a fighting chance. The big banks would eventually win. They simply had too much power.

Even with help from great senators like Ted Kennedy, Dick Durbin, Chuck Schumer, Russ Feingold, and Paul Wellstone, we didn’t win. Even with careful research and numerous studies showing the damage being done to America’s families, we didn’t win. Even with the AARP, the NAACP, and dozens of other great organizations on our side, we didn’t win. Even in a democracy, with millions of people pushed to the breaking point, we didn’t win. We didn’t win? Heck, we didn’t even come close. In the end, the vote in favor of the industry-supported bill was 74–25 in the Senate and 302–126 in the House.

David really did get the slingshot shoved down his throat sideways. It hurt then, and it still hurts now.

The bankruptcy wars changed me forever. Even before this grinding battle, I had begun to understand the terrible squeeze on the middle class. But it was this fight that showed me how badly the playing field was tilted and taught me that the squeeze wasn’t accidental.