Stigma, Be Gone!
By Bankruptcy Attorney on Feb 5, 2007 in General Bankruptcy Information
If you listen to people like Professor Todd Zywicki, a law school professor who featured prominently among the voices clamoring for the adoption of the curiously-named Bankruptcy Abuse Prevention and Consumer Protection Act, you might get the impression that people aren’t ashamed enough of filing for bankruptcy. See the abstract of this 1999 paper he co-authored; among the questionable assertions:
Recent research shows that the rapid increase in bankruptcy filing rates is being driven by two factors, reductions in the economic costs of filing bankruptcy and a decline in the social stigma and personal shame associated with bankruptcy filings. Because the reduction in shame and stigma operates most heavily at the margin for high-income debtors, it can be predicted that the number of high-income debtors who file bankruptcy can be expected to continue to increase in coming years, thereby making means testing increasingly urgent.
I’m not sure with whom Professor Z. is chatting, but the debtors I know are far from complacent about their filing status. If anything, the overwhelming stigma prevents people from filing when they should, often delaying a filing to the point where financial affairs have gone so far south as to be unsalvageable through any other means.
Given that the Bible calls for the forgiveness of debts, I’m of the opinion there should be less stigma, not more. In fact, given the overwhelming emotional toll that heavy debt takes on a family, filing is very often the most responsible and laudable thing a debtor can do.
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