The year of the 1978 act had fewer than 200,000 consumer bankruptcy filings — about one in every 400 households. The year of the failed 1998 act will have a record number of more than 1.4 million consumer bankruptcy filings — about one in every 70 households. Amazingly, more filings occurred during the last six months than during the entire decade of the Great Depression. Much of the debate surrounding the 1998 act centered on the blame for this dramatic rise. Those who stood against reform, primarily bankruptcy attorneys and self‐appointed consumer advocates, blamed loose lending by credit card companies for the dramatic increase. Those urging reform, primarily credit card companies and free market advocates, blamed lax bankruptcy laws for the increase.
Bankruptcy attorneys and self‐appointed consumer advocates have, to say the least, a credibility problem. For decades they argued for changes in the law that ratcheted up the attractiveness of filing for bankruptcy. In response, the Congress has repeatedly done just that, so those are the precise parties to blame for the record number of filings we now have in the midst of good economic times. Bankruptcy attorneys and consumer advocates have also greatly undermined their credibility in the current debate by spreading the lie, repeated by the First Lady in her weekly syndicated column, that credit card companies compete for payment priority in bankruptcy with child support payments. This is an especially hypocritical stance for bankruptcy attorneys who currently line up to be paid before both child support and creditors. Furthermore, bankruptcy attorneys are quick to point out that credit card companies have a financial interest in the reform process, but they ignore their own equally strong interest in a legal system that generates over a million filings and more than a billion dollars in legal fees per year.