8 Comments

At its base bankruptcy constitutes nothing more than a relationship between two persons. It is a function of the human interaction, “I give you this now and I expect to be recompensed for it later.” And the base of this interaction is an agreement between two human beings. (In legal terms, it is a contract.) One of the primary functions of government is to see that these agreements (these contracts) are adhered to in the absence of any other entity, other than those concluding the agreement, who can enforce adherence to the terms. In Lockean terms, if there is no third party to resolve disputes regarding human interactions, civilization, as we know it, falls apart. So bankruptcy and the laws around it need to be understood not as intrusion on the basic lives of human beings but, rather, as an attempt to manage fundamental human interactions that, if left to their own devices, would make society impossible.

Expand full comment

I certainly agree that the concept of bankruptcy is a necessary part of our society, but I think it should be easier to declare, not harder, and that the long-term punishment via the negative impact on credit scores, ability to obtain credit, etc. should be considerably lessoned. Why must it remain on ones credit report for 7-10 years, why not 3-5 years? Why must people who clearly lack cash be punished for that long? I don't see bankruptcy as an intrusion into people's lives at all and do agree that bankruptcy laws, as most laws, are appropriate to help us "manage fundamental human interactions."

Expand full comment

I honestly believe that declaring chapter 7 bankruptcy, which got me out of a very precarious and unhealthy living arrangement, saved my life. And in the 11 years since then, I never had cause to regret it. And now, I live a life with minimal debt (most of it is student loan) and my credit score is astoundingly good and constantly gets better. It was a very rough time in my life and forced me to make a lot of really difficult decisions very quickly, but in the end it worked out. I wish more people understood how empowering it can be, And while individuals may have some responsibility for the situations that lead to bankruptcy, let’s be clear that the real blame falls on the predatory nature of banks, credit card companies and other lenders, as well as outrageous medical costs, educational costs, and so on.

Expand full comment

I so agree with you, and I am so happy that option helped you in such a major way. I can't say that I felt empowered by my bankruptcy—I did it at the very last second to stop my foreclosure sale. Thanks for pointing out that the major blame goes to the banks and credit card companies, medical costs, etc. I'm not arguing against bankruptcy, just the process. As you know, there are some considerable costs to filing—mine was $1500 in attorney's fees and court costs. Appreciate this thoughtful comment!

Expand full comment

oh yes the process was horrific. I had to move out of my home with my ex (which I wanted to do) but I had only a month to do it because of other financial issues. I had to pack up all of my belongings, find homes for my pets, itemize all of my belongings, go to court, find a new place to live and move all within about 30 days, all on top of a full-time job. I didn’t have the filing fee but the attorney I worked with had a payment plan.

Expand full comment

“I didn’t have the filing fee but the attorney I worked with had a payment plan.” So your relationship with your attorney was simply another instance of indebtedness in a cycle of borrowing money which you had trouble repaying. How this helps the issue of bankruptcy I fail to understand.

Expand full comment

I paid it off over a few months. Because I didn’t have $2000 right at that moment. Yes it was short term indebtedness, but it allowed me to get out from under massive debt that was crushing me and preventing me from finding a more healthy living environment, changing careers, etc. I had the attorney fees paid off in just a few months and it was done.

Expand full comment

If my attorney had offered a payment plan, I sure would have taken it! The only reason I had the $1500 to pay my attorney upfront is because I had received a check from my insurance company for a flooded basement, and after making repairs, I had just about that amount left over. My filing process was not at all bad, and the court took nothing. I had very little credit card debt that I discharged—it was all to stop the sheriff's sale of my home. What I am writing about here is the punishment that happens after one declares bankruptcy and why: the horrendously high credit card fees if you can get one at all; the negative mark on your credit reports for 7-10 years which directly effects one being able to get a car lease, apartment rental, job, and more. Why that long of a time? why not 3-5 years? And if you filed bankruptcy to discharge medical debt, which many have, why the punishment then? I thought it would be interesting to write first about the history of bankruptcy laws (briefly) before I wrote a more in-depth piece on the punishment part. But I really believe that the system punishes the poor for being poor in many ways, and I hope to dig deeper into exactly how it punishes those who declare bankruptcy in my next post or two. I might reference your thoughts in my next post, because you have a different take on it, I think. I loved the fact you said it empowered you...I had not thought along those lines.

Expand full comment