Another Ivory Tower Intellectual Gets Consumer Bankruptcy Wrong

04 Jun Another Ivory Tower Intellectual Gets Consumer Bankruptcy Wrong

improper analysisThis week’s Forbes magazine contains an editorial by tax lawyer Steven J. Dunn entitled “Consumer Bankruptcies do More Harm than Good.” Mr. Dunn acknowledges that he is not a bankruptcy lawyer (although he knows a few bankruptcy lawyers – including his son, who once represented a bank in a lawsuit against the president of a company who signed a personal guarantee).

Mr. Dunn then proceeds to discuss his concerns with Chapter 7 (which he mislabels “consumer bankruptcy” – and he thereafter ignores Chapter 13 relief, which is, of course, another type of “consumer” bankruptcy).

With these obvious qualifications and definitions established, Mr. Dunn offers readers the following nuggets of enlightenment about the uselessness of bankruptcy:

  • Creditors rarely sue consumers over debts
  • If a creditor does threaten to sue, the consumer should threaten back to assert his defenses, such as breach of contract or fraud. Chances are the creditor will back off.
  • Debtors commonly lose their houses when they intentionally undervalue their homes in bankruptcy schedules, resulting in trustee objections and, ultimately seizure and sale.
  • Creditors can challenge the dischargeability of a debt. This apparently happens frequently and in the case involving Mr. Dunn’s attorney son, the guarantor that was sued ended up moving to a country with a non-extradition treaty with the United States to escape the judgment.
  • Bankruptcy filings trigger tax audits.
  • Tax debt is especially tricky to discharge in a Chapter 7

Now, I do not know Mr. Dunn, and I am going to assume that he is a reasonable, intelligent and fair minded gentleman. But his editorial completely misrepresents the nature of consumer bankruptcy cases and the fresh start that bankruptcy can and do offer the vast majority of people who file for bankruptcy relief.

In what alternate universe do creditors hesitate to sue debtors? In Atlanta, where I practice bankruptcy law, creditor firms file suits by the hundreds and the notion that a creditor rights mill attorney would hold off on suing because of a “breach of contract” threat by a consumer (this assumes that a non-lawyer consumer knows about affirmative defenses in civil litigation) is patently absurd.

Are dischargeability challenges filed? Of course, but extremely rarely – I have seen less than ten in 23 years of active practice. Do debtors often lose their homes because of intentionally low property valuations? Perhaps – but I have never seen such an instance. Are the rules about tax dischargeability arcane and complex? Yes, but debtors discharge tax liability all the time with no problems.

I suspect that any one of my colleagues here at the Bankruptcy Law Network could fashion a point by point refutation of Mr. Dunn’s editorial. The problem, of course, is that none of us has access to the Forbes Magazine platform. No doubt tens of thousands of affluent, influential and well-connected subscribers are reading Mr. Dunn’s editorial which may reinforce their previously held misconceptions about consumer bankruptcy.

Mr. Dunn paints a wholly inaccurate picture of the consumer bankruptcy world. It is disingenuous at best to use the phrase “consumer bankruptcies” in the title of his article, while disclaiming chapter 13 cases are consumer cases. When he does support his assertions with anecdotal evidence, his examples are the rare exceptions rather than the typical results.

Diligent and thoughtful consumer bankruptcy lawyers always discourage bankruptcy filings unless absolutely necessary. And even Mr. Dunn begrudgingly admits that “I am not saying that bankruptcy never makes sense for a consumer.” But the analysis presented here overlooks and downplays the necessary role that the consumer bankruptcy laws play in preserving hope for millions of hardworking but unfortunate (and, admittedly, sometimes careless) people who deserve better than the purgatory of unmanageable debt.




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Jonathan Ginsberg, Esq.

I represent individuals in Chapter 7 and Chapter 13 cases filed in the Northern District of Georgia, which includes Atlanta, Newnan, Gainesville and Rome. I publish several informative web sites, including and an Atlanta bankruptcy blog, Please mention Bankruptcy Law Network when you call.
  • Andy Miofsky
    Posted at 19:51h, 04 June

    Mr. Dunn apparently does not know the Fair Debt Collection Practices Act [15 U.S.C. 1692] does not apply to an original creditor trying to collect its own debt.

  • Carlos Alsina
    Posted at 06:50h, 05 June

    Does Forbes have an online version of this article? It would be great to tear it apart even on said magazine’s own turf. If it was limited to the viewpoint and opinion, that’s one thing, but when he tries to pass them off as facts, that’s just almost unforgivable.

  • Manuel E. Gutierrez
    Posted at 08:54h, 05 June

    It sounds to me quite arrogant on Mr. Dunn part to discredit the bankruptcy laws of this nation, especially now when a large part of the American population
    is still suffering from the aftermath of ‘The Great Recession’ circa 2007 to the present.that was promoted by the lack of consumer protection in the name of de-regulation of the financial sector.
    Yep; Some people do live in ‘ an ivory tower ‘ but the way it’s now forecast to be
    they may be in for the shock of their lives as the ‘ Great Economy ‘ engine fails to ignite.

  • Ray Johnson
    Posted at 12:00h, 05 June

    Creditors don’t sue consumers?!!!! Collection lawsuits in Iowa courts are now way over 50% of all civil cases. These lawsuits are brought by original creditors, third party collectors and debt buyers by the tens of thousands. Just go to Iowa Courts Online and put in the name of any credit card bank or major debt buyer or third party collector. Unfortunately, over 90% of these consumers default even though many, if not most, have valid defenses to these collection actions. Many don’t even owe the debts because they are time barred or the dent isn’t theirs.

    I would hope when those carrying water for the insurance industry to their “faces of lawsuit abuse” garbage they would at least include the faces of real lawsuit abuse–consumers sued by corporations for debts they don’t owe and defaulted because they couldn’t get an attorney. Throw in a few of the consumers who have had foreclosure proceedings brought against them even though their home mortgages were current and the servicer is incapable of posting payments correctly.

  • epiphany
    Posted at 12:29h, 06 June

    Ivory tower indeed.

    As a recent filer, I could dispute the author point by point as well. I was sued shortly before filing and know others that were too.. Also, it is actually quite rare for a creditor to file an objection because they have precious little chance of winning unless there was some sort of fraud involved.

    I think part of the problem is that people that don’t know jack about bankruptcy, make stuff up as they go along so that they will have something to write about. It is completely irresponsible but unfortunately rampant, especially on the internet.

    I appreciate your article very much and wish good luck to all who find themselves needing a fresh start.


  • Knute Rife
    Posted at 18:36h, 07 June

    Ignorance and arrogance in an article in Forbes? I’m shocked. I’m not going to waste my time rebutting him, not in a medium like Forbes. I’ll just state I couldn’t find a point he was correct on in a statistically significant fashion.

  • John Rogers
    Posted at 10:25h, 10 June

    How sad that an attorney like Mr. Dunn would write an article like this without researching the facts and try to support his assertions by simply inserting an anecdote from a family member that really has nothing to do with the basic consumer bankruptcy experience that all of us, as “down in the trenches” consumer bankruptcy lawyers face ! I see that some have commented on the his article on the Forbes site, pointing out the fallacies in his commentary. I am glad they have. I also noticed that Mr. Dunn, rather than accepting the criticism, shot back with personal innuendo. Not a surprise. That tells us much !
    Mr. Dunn and Mr. Zywicki need to have lunch !! I think they would get along famously !!