11 Jul Forgiveness of debts benefits us all
The only thing about bankruptcy that the NPR commentator Aparna Mathur got right was that bankruptcy benefits our society. She got all the facts about the means test and exemptions wrong; more frightening is that she is research fellow for a long established think tank. But she did understand that cushioning the impact of business failure to the entrepreneur encourages new ideas and business formation.
New York Times writer Tom Friedman recognized years ago that generous bankruptcy laws which encourage risky new ventures and the likelihood of failure that follows was a necessary component for a successful society in our globalized world.
The principle that the economy benefits by allowing people a fresh start in bankruptcy is not confined to businessmen. Keeping consumers shackled indefinitely to the financial consequences of mistake or misfortune dampens their energy and mental well being. It also has the potential to drive economic activity underground, where participants share neither the benefits nor the burdens of governmental health and welfare programs.
Each of us are risk takers in our personal economic lives and when the risk backfires, a fresh start through bankruptcy should be freely available without the artificial and meaningless barriers inserted in the process by the last round of changes to the bankruptcy laws. We would all gain thereby.
Cathy Moran, Esq.
Latest posts by Cathy Moran, Esq. (see all)
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