In 2005 the bankruptcy code was revised to supposedly weed out abusers of the system. What's happened since then? Well, in 2010 alone over 1.5 million Americans were forced into bankruptcy because of a job loss, illness, foreclosure or some other financial crisis. The vast majority of those people weren't abusers of the bankruptcy system, they were victims of a crisis the ordinary man and woman in this country didn't see coming. But regardless of the facts, it seems that we have an obsession and stubborn belief that people who are filing bankruptcy are somehow trying "game" the system.
Let's take a look at the facts:
- There is very little abuse in the bankruptcy system, that's why it works. Despite what people may want to believe, most Americans still believe in hard work and taking care of their responsibilities. That's why so many unfortunately avoid a necessary bankruptcy and end up in the hands of shysters who promise them a way to pay their debts without filing bankruptcy.
- The cases of bankruptcy fraud and abuse that do occur happen with people who for the most part are already morally corrupt. Look at cases such as Madoff, this person had been involved with fraud his entire life, the availability of bankruptcy didn't change that.
- A lot of what some people will characterize as bankruptcy abuse amongst ordinary debtors are simply mistakes, some big and some small. Maybe the debtor doesn't understand that they can't pay their parents before they file bankruptcy or they don't know that they can't pay off the nice plumber down the street instead of the credit card lender who has been harassing them for months. These are not intentional frauds; they are errors that once pointed out can be corrected with the help of a bankruptcy attorney.