Bankruptcy

Whose Fault Is It Anyway? Two Posts at Credit Slips Examine Who’s to Blame For Bankruptcy

At Credit Slips, a blog devoted to “discussion[s] about credit and bankruptcy” (I subscribe to the RSS feed and read avidly - it’s a terrific forum for some very smart people to discuss complex issues), two posts by Bob Lawless have caught my attention.

First, a bit about Professor Lawless (what a great name for a law prof, no?). Professor Lawless moved to the University of Illinois College of Law recently from UNLV. He is instrumental in keeping a listserv running for bankruptcy professionals, in addition to his work for the Credit Slips blog.

The posts in question today are this one, entitled “Values and Expectations About the Discharge,” and this one entitled “Winners Win.” While they have different topics - the value judgments a group of non-US students made about the bankruptcy discharge and whether it should exist in US law, versus the popularity of “personal power”-based philosophies today - they share a common thread, in my mind, which can be summed up thus: an attitude of “if you weren’t such a loser, you wouldn’t need bankruptcy, but since you are, you don’t deserve help.”

This might seem a little oversimplistic - and harshly phrased. Yet it seems to me that this is the very attitude that led to the passage of the BARF. Implicit in its phrasing is a devilish Catch-22 for debtors - those who need the protections of bankruptcy most are deemed to “not deserve it” somehow. Thinking such as this betrays the fears of the thinker, I believe - that “there but for the Grace of G-d go I” is inexplicably more palatable to some when couched as “there but for my superior skills and intellect go I.” The reason why this is so attractive to some, it seems to me, is obvious: we can’t exactly control the Grace of G-d, can we? Yet we can rest assured (although it is definitely a false assurance) that we won’t be subjected to such financial “disgrace” because we are, in some way, superior to those who file for bankruptcy protection.

Of course, this thinking is false on so many levels. For one, it’s fairly well established that profligate spending is not the root cause behind the majority of filings. Most are precipitated by such catastrophic events as unexpected layoffs, a family member’s serious illness, or the like. And as Professor Lawless rightfully points out, it’s certainly easier to conclude the problem lies within one individual, as opposed to a system, an entity, a society, or a set of laws:

How convenient it is for those of us in well-paying jobs to blame someone else’s financial problems on their poor choices. My success in life is due to my good choices and not because I have been lucky enough to avoid major illness or a natural disaster. Such judgments have to affect one’s views on credit and bankruptcy policy. I just posted about a class full of international students who had a widely varying willingness to blame financial problems on a person’s individual failings instead of circumstances beyond their control and how that willingness drove the class discussion. The same dynamic happens with those who make decisions about bankruptcy and credit in our executive, judiciary, and legislative branches.

And yet, I disagree with Professor Lawless about one conclusion. He calls this kind of thinking - the “power rests with me and me alone” philosophy - the “expensive but almost worthless pop psychology that passes for advice in the career counseling industry.” Now, while I do agree that such thinking certainly isn’t the whole story where bankruptcy (or job loss, or any other unfortunate event one can think of in life) is concerned, I don’t agree that it’s “almost worthless.” Instead, I view our personal responsibility for what happens to us in life - the “I created this, whether I am consciously aware of it or not” - as being only part of the story, but not the entire source of such problems. We do what we can, to the extent that we can. Then, we have to realize that there are certain aspects of these events that are outside of our control. When we get to that point, we need to remind ourselves that our power lies in controlling our reactions to the event. I believe that mindset absolutely produces results - good ones - but only up to a point. The very simple reason is that there is a large world of factors that can impact us in both negative and positive ways that are completely outside of our control, as Professor Lawless acknowledges. But there is also a world of factors, events, and circumstances that are to some degree subject to our input and control. The trick? Knowing which is which, and when to stop trying to change the circumstance and focus on changing our response to it.

In this way, I see filing for bankruptcy as a very empowering act of strength. Despite the faux stigma long attached to it, bankruptcy is actually a proactive act of self- and family-protection. One who files is essentially saying to himself and the world, “I am determined to do what’s best for my family and myself despite the negative views of others and the potential impact on my credit history and belongings. I will not keep doing the same thing and expecting different results. I’m going to do what I need to do to alleviate this pain and stress.” That, I find to be an extraordinary act of courage.

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