Professor Zywicki Comments on New Bankruptcy Law

Bankruptcy: Maxed Out In America is the title of a recent American Public Media documentary in which Professor Todd Zywicki provides commentary on the need for the recent changes in American bankruptcy laws. The documentary for American RadioWorks and Marketplace and hosted by commentator Kai Ryssdal looks at the reasons why the numbers of bankruptcy filings have risen so dramatically in recent years as well as the causes of and reactions to these filings by some of the people who have chosen to eliminate their debts through that mechanism.

Bankruptcy: Maxed Out In America, American Public Media, April 2006. Kai Ryssdal, commentator, and Chris Farrell, correspondent.

Farrell: Law professor Todd Zywicki says there's a simple reason so many people go bankrupt today:

Todd Zywicki: People just don't feel as badly about filing bankruptcy as they did in the past, and as a result it's become more socially acceptable and more people have file bankruptcy.

Zywicki says there used to be a social stigma attached to bankruptcy and he wants to bring it back. Zywicki was a proponent of the new bankruptcy law in 2005-a law meant to put more money in the hands of creditors and crack down on deadbeats.

Zywicki: We don't want to live in a society with a million and a half bankruptcy filings a year and a substantial amount of bankruptcy fraud and abuse.

How much abuse? No one is really sure. One reason is what some call abuse others consider using the law to one's advantage. Many judges say scam artists probably account for a fraction of bankruptcy filers, no more than 2 to 4 percent. Zywicki favors an FBI estimate of 10 percent. Whatever the actual number, Zywicki believes the new bankruptcy law is all about restoring individual responsibility.

Zywicki: When we borrow money we make a promise. And I believe that we should live up to our promises to the extent we can. If we can't for reasons beyond our control then a just, charitable society lets us up and gives us a second chance. But if it's just a matter of convenience, if it's just a matter of trying to live beyond our means, then I take a very different view of that.

Listen to the program or read the transcript