Filing personal bankruptcy isn't the big, embarrassing deal it used to be.
It's a fairly routine, seemingly acceptable way of getting out of financial trouble these days. It's not really a black mark on your credit history. It's more like a blemish -- it can be overlooked.
You can start fresh. You can walk away from your debts. More than a million people opted to do just that last year -- and in 1999 and 1998. Something is seriously wrong with that.
It's a troubling pattern that's caused Congress to rethink how bankruptcies should be handled. One solution passed by both the U.S. House and Senate earlier this year would require individuals of above-average financial means who file bankruptcy to set up a repayment plan for their debts instead of walking away scot-free.
After all, what do people learn from a system that doesn't insist on repayment -- even in small installments on an extremely drawn-out schedule? We're teaching these people it's OK to be reckless; that money isn't valuable. That others will clean up the mess they leave behind. What kind of lesson is that?
My husband once had a roommate who declared bankruptcy at the tender age of 22. To see how he lived, you'd never know it. He still had an ATM card which he used to excess, overdrawing his bank account on more than one occasion. He still took his girlfriend to the movies and even on weekend trips to Atlantic City, where he'd blow $900 playing the slot machines and think nothing of it.
He ate out more than he ate in. He still bought CDs and videos and beer. He lived like, if not better than, any other 22-year-old. In fact, he wasn't the least bit ashamed by the bankruptcy filing. He talked about it freely and even bragged about how his apartment was rent-controlled because of it. He thought he had some sweet deal.
Clearly the system needs a radical change if it's encouraging mindsets like this.
If the Bankruptcy Reform Act is executed correctly and individual repayment plans are enforced, it will teach consumers a memorable and valuable lesson in financial responsibility. They'll have to set budgets and live by them every day. They'll learn you have to take responsibility for your spending: If you live beyond your means, it will catch up with you. They'll learn what it means to be held accountable.
After all, not paying a debt is akin to stealing. There should be repercussions. And they should hurt. You should have to go without luxuries for awhile. You should have to sell your CD player, your television set, your VCR, your golf clubs, your art collection and your jewelry to repay what you owe.
You should have to give up the lease on your 2001 Land Rover and drive a used Honda instead. Anything less is just plain wrong.
Some say this new legislation will hurt consumers. Hogwash. I say it will help them -- by making them realize they have to accept responsibility for their actions. If we can't teach people how to set a budget and stick to it, we relegate ourselves to standing idly by as they run into the same credit problems again and again.
Bankruptcy should be a last resort for those in financial trouble. It should be reserved for the most extreme cases. By getting tough on bankruptcy filers now, perhaps we can raise a more financially aware generation of consumers to follow. Nancy Byron (firstname.lastname@example.org) is editor of SBN Magazine in Columbus.