THE BANKRUPTCY CRISIS IN CHICAGO reach-highest-level-since-crisis( March 10, 2017)].
Fourth, Chicago was a creditor’ s“ paradise” and the worst place in the country to be a debtor. One attorney opined that Illinois collection laws were made by creditors for their own benefit.
[ Footnote: The authors note that the Commercial Law League is based near Chicago( in Wauconda, Illinois).“ Since 1895, The CLLA has been associated with the representation of creditor interests...” http:// clla. org /? page = about _ mission.]
Was it the attorneys’ fault?
Or was it the fault of Chicago’ s aggressive bankruptcy bar?
Bankrupt in 10 reported that both the U. S. Attorney’ s office and the Chicago Bar Association were both investigating the“ city’ s skyrocketing bankruptcy rate” in 1957. One of your authors( Mr. Fox) obtained statements from an Assistant U. S. Attorney in Chicago, Nicholas Manos. Mr. Manos identified six Chicago attorneys who were responsible for 50 % of the wage earner bankruptcy filings. Initially, these attorneys obtained their clients from tipsters who fed them names of potential debtor clients. Quoted in Bankruptcy in 10, Chicago based U. S. Attorney Robert Tieken estimated that in 1956, three of the six attorneys filed 1,300 consumer bankruptcy cases and grossed( between them) about $ 260,000.00.
[ Footnote: Most modern consumer bankruptcy attorneys are just small time operators. According to Dollar Times,“$ 260,000.00 in 1956 had the same buying power as $ 2,342,250.75 in 2017.” http:// www. dollartimes. com / calculators / inflation. htm.]
At one time, Landon L. Chapman was Chicago’ s busiest bankruptcy attorney. Mr. Chapman identified the causes of the bankruptcy uptick: the increase in easy consumer credit; unemployment; and the breakup of families and abandonment by fathers of their families. Mr. Chapman suggested prohibiting deficiencies on repossessed automobiles and asking merchants to be more liberal about taking back merchandise when a consumer cannot make the payments.
[ Footnote: Chicago Daily Law Bulletin, What’ s Behind the Increase in Voluntary Bankruptcies Here?, November 29, 1960.]
Landon Chapman believed that“ bankruptcy-made-easy” was the best weapon a little man had against“ unscrupulous credit merchants and money lenders.” Mr. Chapman had 21 employees, including three attorneys. Chapman’ s fees ranged from $ 0.00 to $ 1,800.00; $ 300.00 was an average fee for an individual liquidation. Unlike today’ s practice in chapter 7, Mr. Chapman extended credit to his bankrupt clients, who then paid their fees over time. Surprisingly, Mr. Chapman estimated that his collection rate ran about 85 %.( One room in Mr. Chapman’ s law office had a sign with title“ Credit Office.” Chapman had an active collections department to collect his fees.) In the 1950s, Mr. Chapman’ s gross income had ranged from $ 250,000 to $ 500,000 with Mr. Chapman personally netting between $ 14,000 to $ 45,000 annually.
[ Footnote: Chicago Daily News, How to Halt Bankruptcy Binge, October 15, 1957; Chicago Sun- Times, Why Many Here File for Bankruptcy, January 1963.]
Not everyone agreed with Mr. Chapman. In an anonymous letter to the editor, a collector identified three groups of debtors. The first group( moral and upright) fell into debt-- but responsibly paid their obligations though often over an extended period. The second group of debtors would dispute the debts, hire counsel, and negotiate some lesser payment amount. The third group, the ones who file bankruptcy, do not contact their creditors after running up debts. The collector, name withheld, concluded his letter with the hope that the bankruptcy mills could be“ stamped out in Chicago.”
[ Footnote: Chicago Daily News, undated but likely shortly after October 1957.]
A senior vice president of Wells Fargo Bank opined that people were regarding bankruptcy too casually. Carl S. Hobbed, from the Credit Bureau of Cook County, observed that bankruptcy filings reflected“ a moral breakdown” and a“ cancer.” Bankruptcy, he stated, was once“ a word of shame” but no more.
[ Footnote: Chicago Sun- Times, Why Many Here File for Bankruptcy, January 1963.]
Chicago, 2017
Flash forward to Chicago, 2017. The problems with consumer bankruptcies are still unresolved, and Chicago itself may be heading toward chapter 9. Ironic, don’ t you think?
[ Footnote: John Pletz, Is bankruptcy such an awful idea for Chicago? Crain’ s Chicago Business, http:// www. chicagobusiness. com / article / 20160622 / NEWS02 / 160619845 / isbankruptcy-such-an-awful-ideafor-chicago.]
National Association of Consumer Bankruptcy Attorneys Summer 2017 CONSUMER BANKRUPTCY JOURNAL 31