The Two-Income Trap - Elizabeth Warren [114]
12 Constance M. Kilmark, “Inside the World of the Troubled Debtor,” Journal of Bankruptcy Law and Practice 10 (March-April 2001): 257-278.
13 The exact figure is 84.3 percent of the families interviewed.
14 Judge Edith H. Jones and Todd J. Zywicki, “It’s Time for Means-Testing,” Brigham Young University Law Review (February 1999): 177-249.
15 The bankruptcy laws have their own section of the United States Code, 11 U.S.C. sections 101 et seq. Within that section are the various “chapters.” The first chapters in the code lay out rules applicable to all bankruptcies. Chapter 7 governs the liquidation bankruptcies of both individuals and businesses, Chapter 11 deals primarily with business reorganizations, Chapter 12 governs the restructuring of family farms, and Chapter 13 is for families trying to repay debts over time.
16 Businesses may file for Chapter 11 if they want to try to reorganize, or Chapter 7 if they are to be liquidated immediately.
17 11 U.S.C. section 541.
18 The variation is extreme. Half of all the states have exemptions of $20,000 or less, and six states permit multimillion-dollar exemptions. The National Bankruptcy Review Commission recommended that Congress put a floor and a ceiling on homestead exemptions. At various times, the Senate proposed to cap homestead exemptions pegged variously at $125,000 to $250,000, although the House rejected such caps. But neither the House nor the Senate ever moved to create any floor for homestead exemptions. For many families with high mortgages relative to value, the exemption debate is a distant abstraction: They have no home equity to protect.
19 11 U.S.C. section 523.
20 11 U.S.C. sections 727(a)(8) and (a)(9). The law is more specific: A debtor is eligible for a discharge only after six years have passed. In fact, many families file for Chapter 13, try to make payments, and then drop out of the system when they cannot pay. They received no discharge, so they are eligible to file again. In our study, 5 percent of the Chapter 7 filers had filed for bankruptcy at least once before, and 31 percent of the Chapter 13 filers had been in bankruptcy previously, presumably filing, refiling once, and even refiling a second time, trying to get their financial lives straightened out.
21 11 U.S.C. section 1325(b).
22 11 U.S.C. section 1328(a).
23 In 1981, the median nonmortgage debt-to-income ratio for families in bankruptcy was 0.79. In 1991, the ratio had climbed to 1.06. In 2001, the ratio was 1.5.
24 Personal Bankruptcy: A Literature Review, CBO Papers (September 2000). Available at http://www.cbo.gov/showdoc.cfrm?index=2421&sequence=0 [3/3/2003], See Marianne Culhane and Michaela White, “Taking the New Consumer Bankruptcy Model for a Test Drive: Means Testing Real Chapter 7 Debtors,” American Bankruptcy Institute Review (Spring 1999): 28-75. In a sample of 1,041 Chapter 7 cases, the authors found only six debtors who could repay their debt. See discussion in chapter 6.
25 Adam Fifield, “For the Repo Man, These Are Good Times: The Sluggish Economy Makes for Busy Nights in a Ticklish Job,” Philadelphia Inquirer, December 29, 2002. The rate of mortgage foreclosure increased from 0.31 percent in 1979 to 1.1 percent in 2002. Unpublished data, “Foreclosure at End of Quarter, U.S. (Unadjusted %),” Mortgage Bankers Association of America (2002).
26 Statement of Senator Orrin Hatch Before the United States Senate Committee on the Judiciary (May 21, 1998). Available at http://judiciary.senate.gov/oldsite/ogh52198.htm [3/14/2003]: “[The proposed bankruptcy bill] has new safeguards against the fraud and abuse that costs hardworking Americans.” The American Bankers Association estimates that 10 percent of all bankruptcy filings (approximately 150,000 filings in 2001) are fraudulent. Eric Gillin, “Events Conspire Against Bankruptcy Reform,” The Street.com, posted January 10, 2002. Available at http://www.thestreet.com/markets/ericgillin/10006456.html [3/14/2003]. “What we have a problem with are the individuals who understand how the system works but choose to abuse