In 1950, only 25,000 people filed for personal bankruptcy. By 1980, that number had swelled to nearly 300,000. And while the government is still gathering its numbers on last year, the new figures could be five times that amount: about 1.5 million, or about six percent of the consumer population of this country.
But, that's not as alarming as it may seem when you consider all the credit card campaigns to get Americans to borrow, borrow, borrow and spend, spend, spend -- what they don't have.
Is reform necessary? Lenders say yes, because it's too easy to abuse the current system, and more people should repay their debts. Proposals now on the table will make it a lot harder for people to have their debts completely wiped out in bankruptcy. Instead, they'd be forced to repay at least part of their debts. You can get details on the bankruptcy reform proposal here.
But consumer advocacy groups say the reason so many people are in debt in the first place is loose lending standards. Last year alone lenders sent out five billion credit solicitations, so they deserve part of the blame.
What's alarming is the amount of money spent by banks on Congressional elections. You could probably guess which representatives will vote in favor of the proposed law by taking a gander at their campaign contributions and to whose campaigns they've contributed.
Whoever's right--the lenders or the consumer advocates--don't be surprised if bankruptcy reform ultimately passes. Because in Washington, more often than not, you do get what you pay for.
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