"Reforming" the Bankruptcy Law, Strengthening the Chains of Debt Slavery

Mar 19, 2001

On March 15, the U.S. Senate overwhelmingly passed a so-called bankruptcy reform bill by 83 to 15–with the majority of both parties voting for the bill. A similar measure was passed earlier this month by the House of Representatives. President Bush has already declared that he intends to sign the final bill into law immediately.

Bankruptcy filings have been soaring to record breaking levels in recent years. In 2000, 1.2 million people declared bankruptcy. While this was down slightly from 1998–the peak year, so far–the trend over the last 20 years has been sharply upward. The number of people going bankrupt roughly doubled between 1980 and 1990. It roughly doubled again between 1990 and 2000. And with the economy now in turmoil, the stock market diving, and more and more layoffs being announced every day, it is expected that even more people will soon go into bankruptcy court.

Of course, the credit card companies and banks helped to create this situation. For years they have been pushing everyone to go into debt. Nearly everyone now gets one offer after another for easy credit cards or loans. When you get your statement you’re told you don’t have to pay off the loan–only a tiny part of it. As credit card debt mounted, the banks began pushing homeowners to take out second mortgages in order to pay off their credit card debt. Millions of homeowners–most of them working class people–have done this, only to start using their credit cards again. And the banks and credit card companies have gotten obscenely rich from all these loans–from the fees in rolling over mortgages, from the usurious rates on credit cards.

Debt has soared during the last 20 years–for everyone but the richest people. After taking inflation into account, the debt of the bottom 40% of the U.S. population has roughly doubled; the debt of the middle 20% has gone up by about three-quarters. But the debt of the top 1% of the population has gone down by over 30% during these same years.

The banks’ and credit card companies’ offers of loans have been the only way many working people have stayed even over the last 10 years when the supposedly "booming" economy left them far behind.

Working people and the poor have gone deeper and deeper into debt simply trying to maintain their living standards.

Obviously, this was a sucker’s bet. Sooner or later the banks were going to call in their loans.

Now, with this new bankruptcy law, they are doing it. There is to be no escape from credit card debt, even if it means you don’t pay your house note or child support. The banks, having fastened the chains of debt slavery on the working population, are now pulling the chain tight.