The Two-Income Trap - Elizabeth Warren [132]
91 For additional background on this organization, see, e.g., Steve Cocheo, “In Debt and Loving It,” ABA Banking Journal 89, no. 8 (August 1, 1997); “The Curtain Rises on the Latest Bankruptcy Drama,” Credit Card News (December 15, 1996).
92 Industry analysts estimate that about 31 percent of credit card chargeoffs are listed in bankruptcy, while the remaining 69 percent are simply written off as uncollectable even if the family never files for bankruptcy. “Bankruptcy Losses on Cards,” Nilson Report 779 (January 2003): 6.
93 The bankruptcy lobby group and the supporters of the current bankruptcy bill readily acknowledge that their goal is to reduce the number of families eligible to file for bankruptcy. See, for example, testimony of longtime credit industry lobbyist George J. Wallace, Subcommittee on Administrative and Commercial Law of the Committee on the Judiciary, House of Representatives (March 4, 2003). They do not, however, point out that this means that more families would end up mired in debt for the rest of their lives.
94 “Bankruptcy Efforts ‘Worsen’ Chargeoffs,” Card News 12, no. 21 (October 27, 1997).
95 The bill morphed through multiple versions. To read it, it was necessary to hold a copy of the already lengthy bankruptcy code beside it and try to parse through the proposed changes. The final Engrossed Senate Amendment version was 222 pages long. Bankruptcy Reform Act of 2001, 107th Cong., 1st session, H.R. 333 (Engrossed Senate Amendment version, last updated on 7/18/2001).
96 Common Cause, “Controversial Bankruptcy Bill Moves Forward: Creditor Interests Gave $63 Million,” in CommonCause.org (September 19, 2002). Available at http://www.commoncause.org/moneyinpolitics/img/091902bankruptcy_study.pdf [2/12/2003].
97 American Bankruptcy Institute, Statements Made Upon the Introduction of the “Bankruptcy Reform Act of 1999” (February 24, 1999). Available at http://www.abiworld.org/legis/bills/statements2-24-99.html [3/3/2003].
98 For a detailed discussion of this aspect of the credit industry’s campaign to justify a change in the bankruptcy laws, including dissemination of the claim that bankruptcy costs average families, see Elizabeth Warren, “The Market for Data: The Changing Role of the Social Sciences in Changing the Law” (Fairchild Lecture), Wisconsin Law Review 2002 (2002): 1-43. Note that the figure was originally quoted as $400 per family, but that later commentators inflated the figure, so that $550 is now the figure most commonly cited. The new number has no more factual basis than the original.
99 The creditor coalition hired Ernst & Young (E&Y) to produce some numbers for their public relations campaign. E&Y initially estimated that 15 percent of the families in Chapter 7 might have the ability to pay something under the proposed legislation. Because the debtors in Chapter 13 were already paying, they were left out of the calculation. Nonetheless, the proposed bankruptcy bill would impose several new burdens on Chapter 13 filers as well. Under current legislation, for example, families are permitted to focus their available income on making up home mortgage arrearages; the proposed legislation would require that credit card issuers and car lenders receive more repayments or the family would be denied access to Chapter 13 protection. A year later, E&Y lowered their estimate of potential payers to 10 percent of Chapter 7 filers. (For a review of these two studies, see U.S. Congressional Budget Office, Personal Bankruptcy: A Literature Review, CBO Papers [September 2000]. Available at http://www.cbo.gov/showdoc.cfrm?index=2421&sequence=0 [3/3/2003].) In 2002, 1,036,410 families filed for