Bankruptcy as Social Safety Net

Open Access

Abstract

One in ten Americans have filed bankruptcy at some point during their adult lives. Contrary to the pronouncements of some politicians, these filings do not reflect a series of personal failures and should not be understood as failures of character. Indeed, most of the people who file bankruptcy struggle for years to pay their debts before turning to bankruptcy law and courts for help. And most of the people who file say that they felt shame upon filing. Instead, the bankruptcy filings of millions and millions of people reflect systematic policy choices over the past forty years that have left individuals to deal with life's risks by themselves, without a safety net. In this post, I explain what we can learn about the social and economic problems that plague our society by paying greater attention to the people who file bankruptcy, and why, absent broader changes, we can expect consumer bankruptcy to remain integral to helping people survive in a society marked by racial, ethnic, and gender inequality and with increasing disparities in income and wealth.