THE BANKRUPTCY CRISIS IN CHICAGO
Mr. Bovitz, the use of the gentle
word “debtor” in the modern
Bankruptcy Code (as opposed
to the more descriptive word
“bankrupt” in the Bankruptcy
Act) is reflective of modern
political correctness where every
child gets a participation trophy
for just playing on a sports
team and (as Lake Wobegon’s
Garrison Keillor quips) “all the
children are above average.”]
What were the causes of the uptick
in Chicago filings in the 1950s?
Unsophisticated immigrants from the
deep south? Easy credit? Fine print
in unconscionable contracts? Immoral
debtors? Aggressive collectors? Debtor
attorneys? Bankruptcy mills? All the
above?
The author of Bankrupt in 10 told the
sad story of one young couple (with a
3-year-old son). The family acquired
an “expensive convertible, bought
on time.” In 1956, the father slew his
family and then shot himself. A coroner
determined that the man had committed
suicide “while temporarily insane due
to depression over financial affairs.”
[Footnote: Today, debtors do
not seem to have the same
concern about their financial
failures. See, e.g., In re Curtis
Jackson, aka 50 Cent. Jonah
Bromwich, 50 Cent Tells
Bankruptcy Court Piles of Cash
in Photos Were Fake, New
York Times, March 10, 2016
(“A judge in Connecticut has
asked the rapper 50 Cent, who
filed for bankruptcy protection
last year, to explain Instagram
photos showing him posing
next to or near large piles of
cash, including one picture in
which bills are arranged into
letters spelling out the word
‘Broke.’ “). https://www.nytimes.
com/2016/03/11/nyreg, ion/50-
cent-bankruptcy-fake-cash-
money-bills.html?_r=0.]
According to Bankrupt in 10,
garnishments were causing a loss of
jobs because employers did not want
the extra paperwork associated with
wage garnishments. The loss of jobs
led to more petitions.
Bankrupt in 10 interviewed the Hon.
Wallace Streeter, a Chicago based
bankruptcy referee. Streeter assigned
blame on Southern migration to
Chicago. These new unsophisticated
residents were falling “into the same
pattern of spending -- and credit
trouble.” Bankruptcy referee Victor
LaRule also suspected that many
of the individual filers were recent
unsophisticated
immigrants.
(On
November 27, 1957, a Chicago Daily
News reporter explained that borrowers
could rely on the southern merchants to
set fair credit terms. In contrast, in the
North, “fast-talking fringe merchants”
would say one thing and do something
different to get the sale.)
[Footnote: Chicago Daily News,
Sat. October 12, 1957, page 4.]
According to Bankrupt in 10, the fine
print in sales contracts was another
trap for consumers. The Better
Business Bureau noted that used
car dealers used “[s]ome of the most
vicious installment plan tricks....” The
Better Business Bureau provided the
case history of a man who thought he
was purchasing a vehicle on time for
$128.00. After the installment contract
was signed, the salesman informed
the purchaser that there would be an
additional finance charge of $214.00.
[Footnote: Every time that Mr.
Bovitz rents a car, Bovitz reads
one full paragraph of the fine
print on the contract. Bovitz
National Association of Consumer Bankruptcy Attorneys
Summer 2017
estimates that he will complete
his rental contract review by
2020.]
According to Bankrupt in 10, debt
adjustment counselors were behind
an increase in bankruptcy filings. Local
bankruptcy attorneys accused loan
firms and debt adjustment counselors
of charging a lot of money which could
be put to better use.
[Footnote: This is still a
problem. See Debt Adjustment
Companies: Should you Trust
Their Promises? (“These ‘debt
adjustment’ companies often
make grandiose claims about
how they will significantly cut
your credit card debt and resolve
your money problems. Yet
many of these companies are
not reputable, and trusting
them with your money could
end up putting you in even
worse financial straits.”). http://
consumer.georgia.gov/news/
press-releases/view/debt-
adjustment-companies-should-
you-trust-their-promises.]
Bankrupt in 10 offered the following
solutions to ease the bankruptcy crisis:
enact laws to eliminate deceptive
merchant practices; educate consumers
to spend monies responsibly and
to understand consumer contracts
and their implications; place limits on
garnishments; and prosecute attorneys
who push consumers into unnecessary
bankruptcy filings.
[Footnote: Respectfully, Mr. Fox
does not support prosecution of
attorneys for filing bankruptcy
petitions.]
Jack Mabley was a Chicago
based newspaper columnist.
[Footnote:
https://en.wikipedia.
CONSUMER BANKRUPTCY JOURNAL
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