postings by Debb Thorne

Link to Full Medical Bankruptcy Article

posted by Debb Thorne

On June 5, CBS ran a story, "Medical Debt Huge Bankruptcy Culprit." CBS News story. Not only is it an interesting write up, but there is a link to our (Himmelstein, Thorne, Warren and Woolhandler) full article, "Medical Bankruptcy in the United States, 2007: Results of a National Study." Full text of research article. So if you are interested, you can read the article in its entirety.

The latest Consumer Bankruptcy Project publication: Medical Bankruptcies

posted by Debb Thorne

Along with my co-authors (Himmelstein, Warren and Woolhandler), I would like to share with the readers of Credit Slips some of the highlights of our most recent publication from the Consumer Bankruptcy Project 2007: "Medical Bankruptcy in the United States, 2007: Results of a National Study." (Published June 4, 2009, by The American Journal of Medicine.)

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Thorne's Post to the NYT's blog, "Room for Debate"

posted by Debb Thorne

A couple days ago, I was asked to write up a comment/response to the following statement for the NYT’s blog, “Room for Debate: A Running Commentary on the News”:

“As Congress and federal regulators move to limit how much banks can charge credit card holders who’ve fallen behind on payments, banks are starting to think about making up the lost income by going after those with good credit – like reviving annual fees and eliminating or reducing grace periods for paying off card debt. We asked some experts, should responsible card users (those who typically pay off their monthly charges) bear the cost of credit card services as revenues decline from those with credit problems? Would that shift penalize habits of thrift?”

For what it’s worth, my response is written below. After listening to the stories of indebted Americans for the past decade, I have had it up to here with the portrayals of them as irresponsible deadbeats--so very few fit this stereotype. Therefore, consider yourself forewarned--my pro-consumer perspective is obvious.

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The Meaning of the Loss of Home

posted by Debb Thorne

When Bob Lawless posted yesterday (April 17) the table showing the daily filings for March, 2008, it got me thinking about what exactly those numbers mean, and specifically, about the families who are represented by those statistics and in the middle of financial crises. And while I recognize that not all, or even most, of these filers are losing their homes in the process of bankruptcy, some will be. And this fact really tugged at my emotions.

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An Update on Erica Stevens

posted by Debb Thorne

Back on February 24, I posted the story of Erica Stevens (again, not her real name). Erica is one of the respondents of the Consumer Bankruptcy Project 2007. I described how her bank had held a check from the bankruptcy study for five days, without telling Erica, thus causing a couple of her checks to bounce---to the tune of $33 per check. In our outrage over the way Erica was treated, a couple of us who blog here on Credit Slips volunteered to contact her bank on her behalf (with no charge to Erica whatsoever). The objective was simply to attempt to get the charges reversed. When our interviewer, Denise McDaniel, called Erica with the offer, her reaction surprised us.

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Ripped Off by the Banking Industry

posted by Debb Thorne

Bankrupt folks who participated in the Consumer Bankruptcy Project 2007 had the opportunity to complete a telephone interview. For the interview, they were paid $50. Respondents who shared particularly heroic and inspirational stories could be nominated by the interviewers for additional compensation. Denise McDaniel, one of our interviewers, nominated Erica Stevens (not her real name) for this "award." Little did we know that Erica's bank would take this opportunity to rip her off.

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Another Consequence of Economic Crises: The Loss of our Four-Legged Family Members

posted by Debb Thorne

In my free-time, I frequently cruise the sites of horse rescues and adoption facilities. I certainly don't need another large, four-legged, hairy family member, but, like visiting the local ice cream shop, it's fun to look. Anyway, I've come across several comments describing some of the less-recognized effects of the economic downturn and the increase in home foreclosures. Namely, it appears that as people lose their homes and their jobs, they are increasingly forced to leave their horses at rescues or other shelters. (Even more disturbing, because the market is currently flooded with horses and they are so expensive to maintain, many end up slaughtered rather than at rescues and shelters.) And back in December, The Columbus Dispatch ran a piece on families who had lost their homes in foreclosure and had to leave their dogs at the Franklin County Dog Shelter. The director of the shelter, Lisa Wahoff, said: "There's even a national term for it: 'foreclosure dogs.' We started seeing it more about 18 months ago, people writing 'foreclosure' or 'financial reasons' on their surrender forms."

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Oh! The efficiency of the current U.S. health care system

posted by Debb Thorne

I know that the most recent posts have focused on the mortgage fiasco, but I'd like to insert a quick thought on health care/medical issues.

I'll begin by laying my cards on the table---I am a strong proponent of a single-payer health care system. I've spent too much time talking with medically bankrupt families to have much use for anything else. One of the scare tactics used by opponents of universal health care is telling Americans that if we provide health care for everyone, well, gosh, the wait time for medical attention will be very, very long. Let me be blunt: This is hogwash, and my guess is that many folks who have tried to get in to see a doctor lately know it to be true. 

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The Isolation of Debt and Other Such Things

posted by Debb Thorne

As of today, 700 telephone interviews have been completed as part of the current round of data collection on the Consumer Bankruptcy Project. Since I am overseeing this part of the process, I have had the privilege of being one of the first to hear about people's experiences with bankruptcy. One thing that has struck me repeatedly is the extreme loneliness and isolation that typically accompanies these families as they wind their way through bankruptcy. The people who are going through it often go it alone. They seldom turn to family members or friends for support. More often, they say that it would be a cold day in hell before they even told anyone else about their insolvency, let alone ask them for help. And there simply are no support groups for these people.

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Good Debt?

posted by Debb Thorne

I grew up believing that some types of debt were good and necessary: namely, mortgage and student loan debt. (I'm in my mid-40s, just to provide some historical context.) The assumption, I expect, was that these debts would, in the long-run, pay off. (The house would eventually evolve into wealth to be passed to one's kids and the education would make it possible to pay off that mortgage.) However, with recent reports of corruption in certain segments of the student loan industry, the stories of educated Americans owing more student loan debt than they can ever hope to repay, the historically high rates of home foreclosures, and the meltdown of the mortgage lending industry, I'm not so convinced that either one of these types of debts is at all good. In fact, I think that Americans should be encouraged to rethink (even reject?) these taken-for-granted pillars of the American dream.

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Hang On To Your Bootstraps!

posted by Debb Thorne

One of the things that so many Americans pride themselves on is their ability to make it on their own. Call it the "boot-strap" approach, if you'd like. Very individualistic. Much more so than most other industrialized nations. I was reminded of this quintessential American attitude when I read an email from one of our research assistants who is currently completing questionnaires with bankrupt families for the Consumer Bankruptcy Project.

The questionnaires ask folks what they did to try to "make ends meet" before they finally filed bankruptcy. While we give them a list of prepared options, we also provide them the opportunity to tell us about "anything else" they did to try to make it. Today, one woman told our RA the following:

"I ran an ad in the local newspaper that said, 'Disabled woman wanting to sell household items for gas money.'" This woman went on to say that she had sold almost everything in her house that she doesn't use on a daily basis, as well as family treasures that had been passed down from her grandmother. She said that she also has 25 zucchini in her garden that she is thinking about selling at a veggie version of a lemonade stand. However, she's reluctant because she's afraid she will be fined for not having a vendor's license.

Now if that isn't the American way, I don't know what is. Kind of blows that whole "bankrupts are deadbeats" myth right out of the water, doesn't it?

How deplorable that this country treats its most vulnerable citizens with such disregard. 

Thank you to Keith Kilty

posted by Debb Thorne

I want to extend a sincere thank you to Keith Kilty for guest blogging on Credit Slips this past week. Hearing from scholars in a variety of disciplines is always exciting. I also want to congratulate Keith on the arrival of his new grandson and his recent retirement. I'm sure he will enjoy both!

Welcome to guest blogger, Professor Keith Kilty

posted by Debb Thorne

I am so pleased to introduce and welcome Keith Kilty as this week's guest blogger. Keith is professor in the College of Social Work at The Ohio State University, and has studied and written on numerous aspects of social inequality, including poverty, race, gender, and social class. Keith has also served as vice president of the Society for the Study of Social Problems and co-editor of the Journal of Poverty: Innovations on Social, Political & Economic Inequalities. As a social scientist, Keith will share with us a unique perspective on several issues that are directly and indirectly related to bankruptcy. Again, I want to welcome Keith. I admire his work and look forward to reading his posts over the course of the week.

Stories from the Front Lines

posted by Debb Thorne

Since February, I've been overseeing much of the data collection for the current Consumer Bankruptcy Project study. The process has been amazing, exciting, overwhelming, and often very depressing. (I frequently joke (only partially) with our interviewers that the cost of anti-depressants should have been included in the grant applications!) On a typical day, I talk with maybe half a dozen folks who have recently filed and want to explain their circumstances. Each is convinced that the circumstances behind their bankruptcies were unique--in fact, few of them were. Most have confronted a death, a job loss, or illness--and none of them ever thought this would happen to them. The story of a woman with whom I spoke on Wednesday is all-too common.

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The Gendered Slide into Bankruptcy

posted by Debb Thorne

I'm wrapping up an article on the gendered nature of the slide into personal bankruptcy. It's taken from a chapter of my dissertation--which was the result of interviews with bankrupt couples. Since so little of what sociologists write actually gets read by others (either in the general public or across disciplines), I thought I'd take this chance to share my findings.

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U.S. Wealth Inequality: An Observation from the Stable

posted by Debb Thorne

The wonderful thing about holiday break is that I have guilt-free, university-mandated time to spend a few extra hours at the stable riding my mare, Zoe. I've been at this particular stable for six months now, and, having come from a working-class family, am amazed (maybe appalled would be a better word) by the extreme wealth that is evident there. The $20,000 horse is considered the economy model; at the upper end is the quarter horse gelding that is insured for more than $100,000. For a horse! (And I thought the $2,600 price tag on my Zoe was outrageous.) Of course, when the price of the horse is coupled with the $150,000 horse trailer and the $60,000 pick up truck, well, you get my point.

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The Manifesto of the Communist Party in 2006

posted by Debb Thorne

One of my favorite pieces to read (and reread) when I teach the theory component of my social inequality class is the "Manifesto of the Communist Party," written by Marx and Engels in 1848. My students are always floored at how applicable the manifesto is in today's world--they can't believe that it was written more than 150 years ago. My favorite passage talks about how the survival of the bourgeoisie (or capitalism) depends upon constant revolutionizing, constant change. Marx and Engels insist that it is imperative to the survival of the capitalist system that olds wants be replaced with new ones--and the more rapidly this happens, the better.

Every holiday season, the barrage of advertising reminds me just how right Marx and Engels were. For example, if you bought an IPod this past autumn, you are utterly uncool. The new IPod is so much better that using the old model is unthinkable (and to some young people, unbearable). The same goes for the GameBoys. And cell phones (god forbid that one's phone cannot take photos). And Christmas lawn decorations. And Elmos. And big screen tvs. And laptops. And, and, and....

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Consuming as a Sense of Control

posted by Debb Thorne

In 1989, Fiske wrote the following in his article "Shopping for Pleasure: Malls, Power, and Resistance": "Ownership is at present the only form of control legitimized in our culture." Could it be that Americans are consuming because, in large part, they feel that they otherwise have no control in their lives? As I ponder this, I look out my apartment window at the mall parking lot. (Living in an apartment overlooking a mall is not my idea of a great location, but....) Every day since November 24, that lot has been chuck-a-block full of the cars of shoppers. Mornings, evenings, weekdays and weekends---full to overflowing.

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A huge thank you to Viviana Zelizer

posted by Debb Thorne

At the risk of sounding a bit silly, I am reminded of the old adage "All good things must end," as I write a sincere thank you to Viviana Zelizer for her wonderful guest blogs this past week. For years I have admired her work, so when Bob asked for recommendations for guest bloggers, I jumped at the chance to invite Viviana. I was thrilled when she agreed. You see, I believe that the link between sociology and law should be strengthened--both disciplines have much to offer one another. Without a doubt, Viviana's contributions have demonstrated our disciplines' commonalities. I have learned much from Viviana this past week; I expect that you have done the same. And if we're lucky, maybe she will agree to post on Credit Slips again.

Welcome to Dr. Viviana Zelizer

posted by Debb Thorne

I am pleased to welcome this week's guest blogger and fellow sociologist, Dr. Viviana Zelizer. Dr. Zelizer is the Lloyd Cotsen '50 Professor of Sociology at Princeton University and author of several publications that focus on issues of money--a subject that is, surprisingly and unfortunately, seldom studied by sociologists. Dr. Zelizer's most recent books, The Social Meaning of Money (1994) and The Purchase of Intimacy (2005), are not only great reads, but they have also been very influential in my own work and serve as the gold standard for the few sociologists who do research in this area. I am thrilled that Dr. Zelizer has agreed to join us this week; I have no doubt that even those folks who are not sociologists will find her contribution quite valuable.

Today's Feminism, Consumption-Style: The Perspective of a Young Feminist

posted by Debb Thorne

Two blogs ago, I wrote about a young woman, Bthan Eynon; she and I are working together this quarter as she completes her Honor's thesis for her Bachelor's degree at Ohio University. She is examining the relationship between Third Wave Feminism and capitalism/consumerism. She is such a good writer and thinker, that I asked her to write a short summary of her work that I could share with the readers of our blog. I hope you enjoy her thoughts as much as I do.

In the early 1990s, an underground feminist movement called Riot Grrrl jumpstarted the idea of female empowerment. Shortly after, marketers began latching onto the catchphrase “girl power.” The most memorable example of “girl power” is the Spice Girls, a popular girl music group consisting of five women celebrating girlhood by singing songs about friendship while visually presenting a message of blatant sexuality. But unlike the women’s rock bands involved in Riot Grrrl, the Spice Girls were not about the music at all. With easily sold identities like Baby Spice, Posh Spice, Sporty Spice, Scary Spice, and Ginger Spice, the band became a merchandising phenomenon to the pre-teen demographic. Dolls, games, movies, CDs, and clothes were sold under the guise of girl power. Consuming the Spice Girls was easy—what little girl could resist proving her independence and confidence, plus getting a doll for it?

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Student Loans: A Modern-day Form of Slavery?

posted by Debb Thorne

This past week, students in my Social Inequality course were asked to read and think about causes and consequences of various types of debt. Given the audience, it's no surprise that student loans kept coming to the fore. Well over three-quarters of the students indicated that they would graduate with loans--many of them well over $20,000 owed on a Bachelor's degree in the social sciences, majors that are vital for our society but not notorious for their high salaries. They described an increasingly common pickle--there was no way that they could have attended college without the loans, and they are frightened that they will not be able to repay them, but they knew that without the college degree, their futures were beyond bleak. To say they feel between a rock and a hard place would be an understatement.

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Consumption as a Means of Empowerment

posted by Debb Thorne

I'm leading a tutorial with Bethan Eynon, probably one of the brightest college students I've ever encountered. She's working on an honor's thesis that explores the connection between feminism/women's empowerment and consumption/capitalism. Specifically, she's studying magazine ads to uncover how the empowerment of women (which includes the second and third waves of feminism) has been constructed as their penchant for consuming stuff.

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Seniors and Bankruptcy: America's Dirty Little Secret

posted by Debb Thorne

Recently a frequent reader of Credit Slips, a legal secetary of 30 years, shared an observation and made a request. Her observation: a marked increase in the number of seniors calling the office where she works seeking information about filing for bankruptcy. Her request: Would we be interested in blogging about the subject. I asked to respond to her request because this is one of the issues associated with bankruptcy that most dismays.

In 2001, I co-authored a paper, "Young, Old, and In Between: Who Files for Bankruptcy?" with Teresa Sullivan and Elizabeth Warren. One of the most interesting and disturbing findings was that the percent of filers 65 and over (seniors) had increased significantly since 1991. In 1991, seniors comprised right around 2.4 percent of the population of filers; by 2001, that had climbed to 5.1 percent. This represents more than a 200 percent increase in the rate at which seniors filed. Now, we must be cautious when we discuss these findings because the percent of senior filers is quite low to begin with. But so is the percent of filers under 25. They were 7.9 percent of filers in 1991, but only 5.5 percent in 2001--which demonstrates a decrease in the rate at which they filed. And consider folks in the 55-64 age range: in 1991, they were 6.8 percent of the bankruptcy population, while in 2001 they had increased only a very little to 7.6 percent. So my point is that while seniors may make up only a small portion of the filing population, they, unlike other "minority" age groups, experienced a serious spike in filings. Thus, I would suggest that we take the 200 percent increase quite seriously.

The reader also asked if we would speculate on why this was happening. For insight, I turned to an article by McGhee and Draut, "Retiring in the Red: The Growth of Debt Among Older Americans."  First, the authors point out that while the number of seniors with credit cards has held relatively constant (1992-2001), the amount of credit card debt that they are carrying has increased 89 percent--to an average balance of just over $4,000. If they make minimum payments of 2%, it would take 42 years to pay off the balance. Thus, odds are, they will live out the rest of their lives making payments on this debt. The authors also point out that among those seniors who have annual incomes of less than $50,000 (which is 70 percent of the senior population), one in five of those with credit card debt spend more than 40 percent of their income servicing their debts!

Interviews that I've conducted with seniors have convinced me that few of them are making charges to their credit cards willy-nilly. So how to explain the increased balances? McGhee and Draut make the following observations: between 1992 and 2001, the retirement wealth of the majority of seniors declined; seniors became increasingly asset-poor; and the cost of health care and housing for seniors rose considerably.

When the basic costs of living rise, while income and assets decline, something has to give. And what has given is the ability of seniors to evade credit card debt. This cohort of Americans has historically been quite frugal and averse debt, but when there is no choice, they have few options but to turn to credit cards.

And so the cycle goes....And as the credit card debt piles up, and incomes remain inadequate to cover medical care and housing costs, eventually, bankruptcy is the only choice. I have talked the seniors who have filed for bankruptcy and they are humiliated about their situation. They often refuse to tell their friends or children because they are too ashamed. These are not deadbeats who are out to bilk the system. But until we do something to address the skyrocketing costs of health care and housing, we will continue to see increased bankruptcy rates among our seniors. This is a trend of which Americans should be ashamed.

Students and Credit Cards

posted by Debb Thorne

Classes begin here at Ohio University tomorrow. A new group of first year students are headed our way. Most, for the very first time, are out from under their parents' roof, and, as a result, will experience many new freedoms: the freedom to eat what they want, date whom they want, attend class if they want, sleep as late as they want, do drugs if they want, and.....get credit cards if they want. Here at OU, as predictably as the beautiful foliage in the autumn, the credit card companies set up tables to solicit new (and quite unsuspecting) students. In exchange for some silly thing, such as a tee-shirt, a towel, or a sandwich, students are asked to fill out a credit card application.

The students are completely ignorant of the "terms of the contract" that they sign. Almost without exception, they have no idea what the APR is. They have never heard of "universal default." And they are shocked when they learn that a cash advance costs them more in interest than a card purchase. I know this because every quarter at least one week in each of my classes is devoted to the potential evils of credit cards. When students learn the truth about the "fine print," they are angry to say the least. They feel set up and exploited. "Why," they ask, "doesn't someone tell us about this BEFORE we get the credit cards?"

And I guess that's the point of this blog. If you know of a young person who is headed off to college, please talk with her or him about the fine print on credit card contracts. And if you don't understand the fine print yourself, learn it. And then pass that knowledge on to the younger folks. On campuses everywhere, we stress to our students the importance of eating healthy so that they avoid the Freshman Fifteen; we tell them to drink responsibly and in moderation; we stress the importance of safe sex; we discourage them from skipping classes. But seldom do we stress to them how critical it is to keep their credit good and their credit report clean.

College Students' Responses to their Parents' Bankruptcies

posted by Debb Thorne

Regardless of the class I'm teaching, I always find some way to incorporate the subjects of credit, debt and bankruptcy into my lectures. In Introduction to Sociology, I tie the subjects to discussions of social institutions; in Research Methods, I talk about the methods we use to collect data on the Consumer Bankruptcy Project (and share many of our findings); and in Social Inequality, well, the connection is pretty obvious.

One consequence of these lectures on credit/debt/bankruptcy is that students feel free to come talk with me in the privacy of my office about their parents' bankruptcies. Some cry because they are frightened that their parents will no longer be able to afford to pay for college, which translates into either more student loans or postponing their education. Some are afraid that their friends will find out the truth about why the family sold the house and moved out of the neighborhood. Others are angry at their parents' (assumed) financial stupidity. And still others are relieved to know that their parents are not to blame--their mom's medical bills or the loss of their dad's job better explains what happened to the family.

Granted, these observations are nothing more than anecdotal evidence, but they do suggest that when parents file for bankruptcy, the experience extends to their children. The kids are frightened, embarrassed and angry--all of the emotions that their folks probably felt. Unfortunately, these kids don't feel that they can talk with their parents about the bankruptcy (we all know that people will talk about their sex lives long before they will chat about their finances). Instead, they turn to their professor for reassurance.

Perpetual Debt Servicing Equals Wealth Stripping

posted by Debb Thorne

The topic for this entry was generated by a recent conversation that I had with an individual who was unwavering in his assertion that folks should pay their debts in full, regardless of how long it would take or the costs to a family’s wealth and security. I would like to ponder on the implications of this perspective.

First, let's crunch some numbers. Based on data from the Consumer Bankruptcy Project (2001), the average filer of Chapter 7 had a median annual income of right around $20,600 and a median unsecured debt of approximately $27,200. What are the implications of this debt-load? Best case scenario is that the interest on these debts will be around 18%. If the debtor pays the minimum of approximately 3 percent monthly, it will take right at 28 years to repay this debt, and will result in around $27,000 in interest paid to the lenders. At least initially, monthly payments will be just over $800. We know that the majority of filers are 35-44 years old (Sullivan, Thorne and Warren 2001), so the debtor will be approximately 68 years old, maybe 70, before the debt is repaid (assuming that no additional unsecured debt is accrued).

From these facts evolve two pretty important questions. First, how are families affected by a lifetime of servicing debts like this? For example, how in the world will they be able to put away money for their children’s college expenses when so much is going toward debt repayment? My guess is that they won’t be able to save for college. So, their children will leave college buried in student loan debt. Further, if they are like many American families, the house has probably been refinanced a couple times and will not be paid off before retirement, thus leaving them quite vulnerable to foreclosure. Rather than making larger mortgage payments, the family has spent hundreds of dollars each month bolstering the wealth of the lending industry. And what about saving for retirement? If there is a monthly outlay of $800 to service debts, will there be anything left for the 401K? Doubtful. And if not, then these folks will enter retirement with essentially nothing in savings. Which leaves them quite vulnerable and quite likely to end up dependent on social programs.

Second, what does this type of perpetual indebtedness mean for the distribution of wealth in our country? Rather than building their own wealth through homeownership, retirement accounts, and higher education, these families are financing the massive wealth accrual of the lending industry. If it were just a couple families who were experiencing this type of wealth transfer, then there would not be much cause for alarm, but millions of families are experiencing this wealth stripping. Their wealth is sifting through their fingers and falling directly into the laps of the credit card companies, who are accruing massive wealth. So, rather than a society of families who have invested in themselves, and as a result have modest wealth and are financially stable, we now have families that are much more likely to have negative wealth and are exceedingly vulnerable—and more likely to eventually need the help of social services.

So, to return to the comment that precipitated this entry. Does it make sense to chain indebted families to decades or lifetimes of debt repayment? I don’t think so. We would be better off encouraging them to grow their own wealth, rather than transfer it to the already gluttonously wealthy.

References

Sullivan, Teresa A., Deborah Thorne, Elizabeth Warren. 2001. "Young, Old and In Between: Who Files for Bankruptcy?" Norton Bankruptcy Law Advisor. 9A:1-10.

Shame on You: The Stigma Associated with Personal Bankruptcy

posted by Debb Thorne

In the late 1980s, when the upsurge in bankruptcies had just begun and folks were searching for explanations, cries of a decline in stigma rang out. Interestingly, despite an essential absence of data from debtors themselves, this explanation was long-lived. Indeed, it was cited frequently during the Congressional debates that preceded BAPCPA. But as any sociologist would tell you, a decline in stigma as an explanation just doesn't make sense. Rates of bankruptcy filings are cyclical; stigma does not wax and wane in that way.

Just last month, Sociological Focus published my article, "Managing the Stigma of Personal Bankruptcy" (co-authored with Dr. Leon Anderson), in which I provide evidence that the stigma associated with filing is alive and well. For those unable to access the article, allow me to summarize. Although the sample was small, 95 percent of the debtors reported that they felt stigmatized by their bankruptcies. For example, a retired mail carrier stated: "I thought of it as a mark against my name . . . It was too embarrassing . . . I feel like I failed. You know, to go bankrupt, that's a sign of failure."

Not only did the debtors vocalize their feelings of stigma, but they also managed it in ways that are classic among other stigmatized groups. For example, they tried to conceal their bankruptcies, especially from their parents. One man, a father of two young boys, reacted in the following way when he was asked if his mom knew he had filed: "OH HELL NO!!! No, no, no, no way, no way. Nope. And she won't ever know. Never! Never. . . . She'd be like, 'Argh, you piece of shit. Why did you do that?" Debtors also practiced avoidance, whereby they avoided situations that might expose them. An example of this was described by a woman who said that she would never again take her kids to their family dentist because debts to him had been discharged. Rather than risk the potential embarrassment, she concluded that they would have to find a new dentist. Finally, the debtors went to great lengths to differentiate themselves from all those other "deadbeats" out there who supposedly abuse the system. They insisted that their own bankruptcies were bankruptcies "of necessity," not extravagance or abuse. And finally, three-quarters of them insisted that under no circumstances whatsoever would they set foot in bankruptcy court again. One man, who blamed his wife for their bankruptcy, said that he would divorce her first. Another said that he'd kill himself before he'd file again. This is probably an exaggeration, but it demonstrates the power of the stigma of bankruptcy.

I have no doubt that there are folks out there who file without feeling a shred of remorse or stigma. But my research suggests that they are the minority. For centuries, bankruptcy has been highly stigmatized. And, I would argue, it still is.

Update: We have opened the comments for this posting.

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