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it, and we estimate that’s about 10 percent of all bankruptcy filers,” said Catherine Pulley, spokeswoman for the American Bankers Association. All Things Considered, National Public Radio, July 26, 2002. The industry meaning of “fraud and abuse” is fairly aggressive: The industry also claims that about 10 percent of all families currently in Chapter 7 (or 7 percent of bankrupt families overall) could pay something to their creditors if they went on a stringent, court-imposed budget for five years. Evidently failure to pay that “something” by giving up every dollar of disposable income to creditors is, according to this group, “fraudulent.” It is important to note that the credit industry does not accuse these families of any acts that would be considered fraudulent in a legal sense, such as providing false information on a credit application, violating the bankruptcy laws, or lying under oath. Indeed, there is no accusation that these families have deceived anyone (which is usually the meaning of “fraud”), either the courts or their creditors. The industry claims of how many families could repay has never been corroborated by any independent source. See discussion in chapter 6.

27 18 U.S.C. sections 152, 157.

28 For a more detailed discussion of how a bankruptcy case is initiated, see Teresa A. Sullivan, Elizabeth Warren, and Jay Lawrence Westbrook, As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America (New York: Oxford University Press, 1989), pp. 20-45.

29 Many of the families in the bankruptcy system go to high-volume attorneys who advertise widely and who make their money by standardizing procedures and minimizing the time the attorney spends with the client. Often called “bankruptcy mills,” these law offices may or may not give good legal advice, but it is clear that what they tell their clients is fairly routinized. See, e.g., Teresa A. Sullivan, Elizabeth Warren, and Jay Westbrook, “The Persistence of Local Legal Culture: Twenty Years of Evidence from the Bankruptcy Courts,” Harvard Journal of Law and Public Policy 17 (1994): 846-850; reprinted in Charles J. Tabb, Bankruptcy Anthology (Westbury, NY: Foundation Press, 2002).

30 In 1980 there were 291,000 personal bankruptcies, just 19 percent of the 1.5 million personal bankruptcies that were filed in 2002. If fraud alone accounted for the entire increase in bankruptcy filings, then there would have been more than 1.2 million (1.5 million minus 291,000) fraudulent filings in 2002—or 80 percent of the total filings.

31 Among bankrupt families with children, 71.5 percent report a job loss, a reduction of income, or other job-related problem as a reason for filing. Fifty-three percent report a medical problem, which includes all filers who reported $1,000 or more in unpaid medical bills, who had at least two weeks of unpaid leave from work because of an illness or disability, or who explained that they filed for bankruptcy because of a medical problem. Family breakup, cited by 19 percent of families with children, includes those who reported “divorce or family breakup” as a cause of bankruptcy. Families with children cite at least one of these problems in 86.9 percent of all cases. The remaining 13.1 percent give either a different reason or no reason at all.

32 Johanne Boisjoly, Greg J. Duncan, and Timothy Smeeding, “The Shifting Incidence of Involuntary Job Losses from 1968 to 1992,” Industrial Relations 37 (April 1998): 207-231, Figure 4. From 1968 to 1979, the average annual rate of job loss because of layoffs or company closing among men aged twenty-five to fifty-nine was 2.5 percent.

33 This calculation assumes that husbands and wives face roughly the same risk of getting laid off in a single year. See, e.g., Peter Gottschalk and Robert Moffitt, “Job Instability and Insecurity for Males and Females in the 1980s and 1990s,” Working Paper 408, Department of Economics, Boston College (January 1999), p. 9. The authors found that men and women had similar rates of job exits during the period 1981-1991.

34 For simplicity’s sake, this calculation