The evolution of bankruptcy stigma

Theoretical Inquiries in Law

Volumn 7, Issue 2, 2006, Pages

  Efrat, Rafael ^a  

^a CALIFORNIA STATE UNIVERSITY   (United States)

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EID: 33751055269     PISSN: 15653404     EISSN: 15653404     Source Type: Journal    
DOI: 10.2202/1565-3404.1130     Document Type: Review

References (220)

1. See infra notes 29-40 and accompanying text.
2. See infra notes 12-18 and accompanying text.
3. See infra notes 19-24 and accompanying text.
4. See, e.g., W.J. Jones, The Foundations of English Bankruptcy: Statutes and Commission in the Early Modern Period 53 (1979) (suggesting that during the 17th century, bankrupts in England "were considered by some as worse than highway robbers and more damaging than foreign enemies");
5. Barbara Weiss, The Hell of the English: Bankruptcy and the Victorian Novel 35 (1986) ("It is clear from such statements that bankruptcy was considered [during the Victorian era in England] a shameful condition, worthy of the harshest language.");
6. M.S. Servian, Eighteenth Century Bankruptcy Law: From Crime to Process 38 (1985) (unpublished Ph.D. dissertation, University of Kent at Canterbury) (on file with author) (" 'Bankruptcy' laws have virtually universally carried with them social stigmatization for the bankrupt.");
7. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, reprinted in 39 Great Books of the Western World 1, 148 (Robert M. Hutchins ed., 1952) ("Bankruptcy is perhaps the greatest and most humiliating calamity which can befall an innocent man. The great part of men, therefore, are sufficiently careful to avoid it. Some, indeed, do not avoid it; as some do not avoid the gallows.");
8. James Q. Whitman, The Moral Menace of Roman Law and the Making of Commerce: Some Dutch Evidence, 105 Yale L.J. 1841, 1871 (1996) ("To European authors everywhere in the seventeenth century, the declaration of bankruptcy was the single most scandalous phenomenon of commercial society ... all of whom regarded the declaration of bankruptcy as a ghastly evil.");
9. id. at 1876 (quoting a German pamphleteer of 1619 describing the reaction in the community of a bankruptcy filing as follows: "Once word of this makes the rounds and becomes known, the average man bursts out with imprudent, violent and angry words. He storms, curses, blasphemes, says scandalous and contemptuous things about debtors, denouncing them as rogues, thieves and men without honor ....").
10. See, e.g., Weiss, supra note 4, at 29 (1986) ("There is no denying the sincerity of the Victorians' moral outrage toward bankruptcy.").
11. For example, during the seventeenth century in France, the term "bankrupts" referred only to fraudulent debtors. See 2 George J. Bell, Commentaries on the Law of Scotland and on the Principles of Mercantile Jurisprudence 471 (7th ed. 1868).
12. Similarly, certain segments of the commercial society in medieval Italy formally referred to bankrupts as deceivers and frauds. See Bolkmar Gessner et al., Three Functions of Bankruptcy Law: The West German Case, 12 L. & Soc'y Rev. 499,531 (1978).
13. Lastly, the Bankruptcy Act in England in the early 18th century was titled "An Act to Prevent Frauds Frequently Committed by Bankrupts," 1705, 4 Ann., c. 17 (Eng.). The introductory statement to the Act explains that "bankruptcy was caused not so much by reasons of losses and unavoidable misfortunes, but rather by an intent to defraud and hinder [creditors] of their just debts...." See also Jay Cohen, The History of Imprisonment for Debt and Its Relation to the Development of Discharge in Bankruptcy, 3 J. Legal Hist. 153, 157 (1982).
14. The debtor's violation of the debtor-creditor trust relationship was deemed a violation of social norms because it was viewed as a betrayal of an almost sacred relationship. See Lisa J. McIntyre, A Sociological Perspective on Bankruptcy, 65 Ind. L.J. 123, 136 (1989) ("Bankruptcy is an indication that one has betrayed (or is betraying) a trust that is judged to be important by many. Thus, the debtor contemplating bankruptcy anticipates that betrayal of this trust will lead to a shared outrage and stigma.");
15. Servian, supra note 4, at 23 ("Judges [in England] saw bankrupts as posing a threat to the very fabric of their contemporary social order: credit was widespread in 18th century society, and someone who became insolvent posed a direct threat to the stability of that system.").
16. For example, in 18th century England, the public held a restrictive view of personal credit, "for the law holds it to be unjustifiable practice for any person but a trader to encumber himself with debts of any considerable value." 2 William Blackstone, Commentaries on the Laws of England *473-74.
17. See G. Crompton, Practice Common-Placed: Or, the Rules and Cases of Practice in the Courts of King's Bench and Common Pleas, at xix (3d ed. 1786) (As one commentator on 18th century English law stated: "If persons in other stations of life [non-traders] will run into debt without the power of judgment, the legislature has wisely left them to take the consequences of their own indiscretion.").
18. See Charles J. Tabb, The Historical Evolution of the Bankruptcy Discharge, 65 Am. Bankr. L.J. 325, 330 (1991) ("Under this act (and almost three centuries hence) bankruptcy [in England] was purely involuntary as to the debtor.").
19. See also Vern Countryman, Bankruptcy and the Individual Debtor and a Modest Proposal to Return to the Seventeenth Century, 32 Cath. U. L. Rev. 809, 811 (1983).
20. See Peter J. Coleman, Debtors and Creditors in America: Insolvency, Imprisonment for Debt, and Bankruptcy, 1607-1900, at 269-70 (1974) ("Bankruptcy was a legal status, a condition arrived at by committing a proscribed act, such as concealing property from lenders, absconding, or transferring assets with fraudulent intent.");
21. Weiss, supra note 4, at 35: "[T]his 'terror' on the part of respectable businessmen at the name of 'bankrupt' may be explained by the criminal origins of the laws of bankruptcy.... The criminal origins of bankruptcy law were very likely one reason for the social disgrace that attached to it."
22. See George Sullivan, The Boom in Going Bust: The Threat of a National Scandal in Consumer Bankruptcy 24 (1968).
23. See Servian, supra note 4, at 38 ("[According to the ancient Boetian bankruptcy code], the Boetians caused their bankrupts to be disgraced by forcing them to sit in the market place with a basket on their heads.").
24. 1 S. Scott, The Civil Law 63-64 (1932).
25. Whitman, supra note 4, at 1873.
26. Bell, supra note 6, at 472.
27. Id. at 471.
28. See Whitman, supra note 4, at 1875 (to reinforce public conformation and humiliation of the bankruptcy petitioner, in 1490, French law mandated that petitioners appear before a judge "bare-headed and with their clothing hanging open [to expose their naked bodies] to mark and augment their infamy").
29. See Ian F. Fletcher, The Law of Insolvency 33 (1st ed. 1990) ("In everyday usage, the terms 'bankruptcy' and 'bankrupt' carry heavy connotations of personal disaster accompanied by social stigma, giving rise to the supposition that bankruptcy is a fate to be avoided at all costs."). The adverse connotation of the word "bankrupt" has been in existence for a long time.
30. See Israel Treiman, Acts of Bankruptcy: A Medieval Concept in Modern Bankruptcy Law, 52 Harv. L. Rev. 189, 189 (1938) ("Even without the disgrace implied in the very etymology of the term bankrupt, undiscriminating condemnation of the debtor who fails to meet his obligations will probably continue as long as human nature is what it is.").
31. See Gessner, supra note 6, at 531.
32. See Fletcher, supra note 19, at 6;
33. Servian, supra note 4, at 21.
34. Fletcher, supra note 19, at 6 ("The repeated references in the statute to absconding debtors as 'offenders' signifies the close identification between bankruptcy and criminality at this period, a stigma which was to endure until relatively recent times and one which has not yet been totally relinquished.").
35. See Daniel Desurvire, Histoire De La Bankqueroute et Faillite Contemporaine 11 (1992). "Bankqueroute" in French refers to debtors on the road who departed without paying their debts and lived off their illicit gains.
36. See Joseph Pomykala, Bankruptcy Reform: Principles and Guidelines, 20 Regulation, Fall 1997, at http://www.cato.org/pubs/regulation/reg20n4g.pdf.
37. See Pascal Ancel, Droit Des Suretes 2-3 (2d ed. 2000);
38. J.H. Dalhuisen, Dalhuisen on International Insolvency and Bankruptcy, Sec. 3.02[1] (1983).
39. One king described his feeling toward bankruptcy stigma as follows: "The stigma of bankruptcy has always terrified me." Servian, supra note 4, at 229. In the 17th century, Shakespeare referred to a bankrupt individual as "a prodigal who dare scarce show his face at the Rialto."
40. William Shakespeare, The Merchant of Venice act 3, sc. 1
41. cited in Servian, supra note 4, at 38.
42. See Servian, supra note 4, at 229 (a bankrupt individual is stripped of his status and is separated from his community).
43. "Till [the bankrupt] has gained [his certificate] he is separated from the community he has wronged." Id. at 222.
44. In England, the period during which a bankrupt could remain in the bankruptcy process without getting a discharge was sometimes indefinite. This observation was made by a British bankruptcy reform committee in 1982. It found that "[p]rior to the Insolvency Act of 1976 [in England] the onus had been on the bankrupt to apply to the court for discharge. Many did not do so, either through ignorance of the procedure or reluctance to attend open court and thus to attract further publicity." Sir Kenneth Cork, Insolvency Law and Practice: Report of the Review Committee 142 (1982).
45. A similar phenomenon was reported in Israel. See Philip Shuchman, Field Observations and Archival Data On Execution Process and Bankruptcy in Jerusalem, 52 Am. Bankr. L.J. 341, 364 (1978).
46. The author found that many bankruptcy petitions in Israel remained open but inactive for many years. The fact that many cases simply remain open for years, with no activity and with no discharge, demonstrates that debtors either do not apply for discharge altogether, or do apply and are denied. In the Jewish tradition, formal ostracism of defaulting debtors was not generally practiced. However, during the 11th Century, some communities placed a ninety day ban against any debtor who failed to repay his debts, unless the debtor was able to demonstrate that he did not have the means to do so. See Menachem Elon, Freedom of the Debtor's Person in Jewish Law 38-49 (1964).
47. See Servian, supra note 4, at 222 ("As we know, the swindler/undischarged bankrupt was outlawed from the merchant community both by his inability to receive or to earn money for himself, and by the immense stigma attached to his being an undischarged bankrupt.").
48. See Charles J. Tabb, The History of the Bankruptcy Laws in the United States, 3 Am. Bankr. Inst. L. Rev. 5, 7 (1995).
49. See Servian, supra note 4, at 42.
50. See id.
51. See Sullivan, supra note 12, at 24-5.
52. See Barbara A. Mathews, Forgive Us Our Debts: Bankruptcy & Insolvency in America, 1763-1841, at 9 (1994) (unpublished Ph.D. dissertation, Brown University).
53. See id.;
54. Tabb, supra note 29, at 7;
55. J. N. Funceius, Leges XII Tabularum, fragmentis restituæ et illustratæ (1744).
56. See Gessner, supra note 6, at 532-33.
57. See also Ian P.H. Duffy, English Bankrupts, 1571-1861, 29 Am. J. Legal Hist. 283, 284-85 (1980);
58. Tabb, supra note 10, at 330, 332 n.41.
59. Bankruptcy Act, 1705, 4 Anne, c. 17 (Eng.);
60. See Fletcher, supra note 19, at 8;
61. Duffy, supra note 36, at 287.
62. Bankruptcy Act, 1820, 1 Geo.4, c. 115 (Eng.);
63. See Joseph Pomykala, Bankruptcy's Origins in Debtor Perpetrated Crime 4 (Oct. 2000) (unpublished manuscript, on file with author) ("Debtors convicted of bankruptcy in England could be hanged until an 1820 enactment substituted seven years, with or without hard labor, for the death penalty.");
64. Tabb, supra note 29, at 7 ("Early English law had a distinctly pro-creditor orientation, and was noteworthy for its harsh treatment of defaulting debtors. Imprisonment for debt was the order of the day . . . ."). The popularity of imprisonment for defaulting debtors was alluded to by a seventeenth century English jurist, Sir Robert H. Hyde, who stated that: If a man be taken in execution, and lie in prison for debt, neither the plaintiff, at whose suit he is arrested, nor the sheriff who took him, is bound to find him meat, drink, or clothes; but he must live on his own, or on the charity of others; and if no man will relieve him, let him die in the name of God, says the law; and so say I.
65. James L. Bishop, A Treatise on the Common and Statute Law of the State of New York Relating to Insolvent Debtors 4 (3d ed. 1895) (quoting Sir Robert H. Hyde).
66. See Pomykala, supra note 38, at 5.
67. See Rafael Efrat, Global Trends in Personal Bankruptcy, 76 Am. Bankr. L.J. 81, 83, 89-90 (2002) (describing penalties imposed on bankrupts in Italy, England, and Canada).
68. See Gessner, supra note 6, at 532 ("[T]he penal sanctions associated with the verdict of bankruptcy, . . . carried a moral stigma and social disqualifications.").
69. During the initial years of colonization, most statutes were rather favorable towards debtors. However, this sympathetic attitude soon disappeared. See Coleman, supra note 11, at 249.
70. See Edward Channing, A History of the United States 184 (1921) ("the non-payment of debt . . . was looked upon as practically the equivalent of theft.").
71. See 1 Benjamin Franklin, The Papers of Benjamin Franklin 342-49 (Leonard W. Labaree ed., 1963):
72. Think what you do when you run in Debt; You give to another Power over your liberty. . . . The Borrower is a Sale to the Lender, and the Debtor to the Creditor, disdain the Chain, preserve your Freedom, and maintain your independency: Be industrious and free; be frugal and free. See also Bruce H. Mann, Republic of Debtors: Bankruptcy in the Age of American Independence 130-31 (2002) ("The image of debtors as slaves was a common one before the Revolution. . . .");
73. id. at 145 ("the imagery of insolvency was dependence");
74. Scott A. Sandage, Deadbeats, Drunkards, and Dreamers: A Cultural History of Failure in America, 1819-1893, at 115-217 (1995) (unpublished Ph.D. dissertation, Rutgers Univeristy) (on file with Rutgers University Library) (documenting pervasive use of the slavery metaphor in bankruptcy debates from 1820 to 1867).
75. See Coleman, supra note 11, at 249 (remarking that by the close of the 17th century, debtor's prison was widespread in the American colony);
76. Mann, supra note 44, at 79 ("The only consistency among debt laws in the 18th century was that every colony, and later every state, permitted imprisonment for debt . . . .");
77. Sullivan, supra note 12, at 29 (in the years that followed the American revolution, "more people were imprisoned for debt than for any other reason");
78. Thomas E. Plank, The Constitutional Limits of Bankruptcy, 63 Tenn. L. Rev. 487, 518 (1996) (asserting that during the colonial period, debtor's prison was pervasive).
79. See Lawrence M. Friedman, Crime & Punishment in American History 37 (1993) (noting that shaming practices were routinely used in the small town and intimate communities during the colonial period);
80. Toni M. Massaro, Shame, Culture, and American Criminal Law, 89 Mich. L. Rev. 1880, 1915 (1991) ("the white colonists lived in intimate, closely bound, and normatively cohesive communities, with in which shaming could and did play a signal role in reinforcing standards of behavior.").
81. Pomykala, supra note 38, at 4 n.2.
82. See Joseph S. Pomykala, Bankruptcy Laws: The Need for Reform, in Legal Environment of Business 178, 180 (Kurt Stanberry ed., 2000).
83. See Edward J. Balleisen, Navigating Failure: Bankruptcy and Commercial Society in Antebellum America 12 (2001) ("beginning in the 1820s, the use of the debtor's prison in the United States began to decline, with several states limiting imprisonment to instances of fraud");
84. Mathews, supra note 33, at 207 (describing the trend during the 19th century in a number of states of beginning to dismantle the institution of debtor's prison).
85. See, e.g., In re Gibraltor Amusements, Ltd., 291 F.2d 22, 27 (2d Cir. 1961) (alluding to the vigor of bankruptcy stigma during the 19th century).
86. See Marcus Cole, A modest Proposal for Bankruptcy Reform, 5 Green Bag 2d 269, 273 (2002).
87. See In re Lawrence Products Company, Inc., 211 F. Supp. 301, 305 (1962) ("During the authorship of the Chandler Act [of 1938], many advocated the complete divorcement of Chapters X, XI, XII, and XIII from the Bankruptcy Act to avoid the stigma of bankruptcy.");
88. Treiman, supra note 19, at 189 (asserting that bankruptcy stigma is as strong as it used to be during the 17th century).
89. See Message from the President of the United States Recommending the Strengthening of Procedure in the Judicial System Together with the Report of the Attorney General on Bankruptcy Law and Practice, S. Doc. No. 65 (1932).
90. See Thomas D. Thacher, Administration of the Bankruptcy Act, Report of the Fifty-Third Annual Meeting of the American Bar Association Held in Chicago, Illinois, August 20,21, & 22,1930, at 251, 255 (1930) (referring to a sharp increase in the number of consumer bankruptcy filings during the 1920s);
91. Catherine L. Kruchen, Casenote, Domestic Relations - Support of Stepchildren - Obligation to Support Stepchild Held to be a Debt, Not a Legal Duty, and Therefore Step-parent's Contempt of Court for Default in Support Payments Cannot be Punished by Imprisonment -Brown v. Brown, 287 Md. 273, 412 A.2nd 396 (1980), 10 U. Bait. L. Rev. 190, 193 (1980) (indicating that by the 1920s, most states had abolished imprisonment for debt except for limited circumstances).
92. See Victor Sadd & Robert T. Williams, U.S. Dep't of Commerce, Causes of Bankruptcies Among Consumers 8 (1933) (suggesting that bankruptcy stigma has been declining in recent years);
93. Thacher, supra note 54, at 251, 255 (the Solicitor General of the United States blaming the rise in consumer bankruptcies during the 1920s on the decline of bankruptcy stigma).
94. See Wage Earner Plans Under the Bankruptcy Act: Hearing on H.R. 1057 and H.R. 5771 Before the House Comm. On the Judiciary, 90th Cong. 3 (1967): Consumer bankruptcy in the United States is beginning to assume alarming proportions. . . . As a percentage of total bankruptcies, the figures are even more dramatic. In 1940, the figure was 25%, in 1966, it was 91%. . . . No, it is not the growth of installment sales which deserves the indictment. . . . It belongs, too, with changes that have taken place in society's attitudes about principles, values and priorities.
95. Sullivan, supra note 12, at 9: It wasn't many years ago that bankruptcy was regarded as a fairly wicked way to wash out one's indebtedness. Any man who went bankrupt was treated almost as a leper. Women filed about as often as they swam the English Channel. Bankruptcy had a stigma attached to it. It still does, but the scar it leaves isn't nearly so deep as it used to be.
96. Fred C. Fields, Needed Changes in Individual Bankruptcy, Proceedings of Oklahoma Institute of Consumer Credit Management for 1959, in George A. Brunner, Personal Bankruptcies: Trends and Characteristics 4, 7 (1965), opines that the increase in bankruptcy filings by individuals is attributed to a change in the attitude of the public which condoned bankruptcy . . . that individual bankruptcy was not a disgrace, but just a smart business tactic . . . . Debtors were taught to take the easy way out. The moral courage which had so long been dominant in our wage earners began to deteriorate.
97. G. Stanley Joslin, The Philosophy of Bankruptcy - A Re-Examination, 17 U. Fla. L. Rev. 189, 192 (1964) ("while one may become somewhat stigmatized as a result of bearing the label of a bankrupt, this stigma is becoming of diminishing social importance").
98. See Herbert Jacob, Debtors in Court: The Consumption of Government Services 113 (1969) (reporting on a US Gallup Poll conducted for the Brookings Institution in 1966 which revealed that fifty-five percent would refuse or hesitate to do business with someone who had gone bankrupt while forty-two percent thought their friends and co-workers would think badly of them if they went bankrupt);
99. David T. Stanley & Marjorie Girth, Bankruptcy: Problem, Process, Reform 231 (1971) (reporting the findings of a survey of 1,523 interviewees to the following question: "Suppose you, yourself, got into a very difficult financial situation -how would you feel about going bankrupt?" Of the more than 75% who would not go bankrupt, 20% would not go bankrupt under any circumstances, 33% would go bankrupt only as a last resort, 18% would feel disgraced if they did, and 5% could not conceive of going bankrupt);
100. Milton J. Huber, A Study of Financially Over-Extended Families 28-29 (1965) (unpublished manuscript, on file with author) (reporting that a sizeable percentage of financially troubled individuals, who opted not to file for bankruptcy, had declined bankruptcy "on grounds of morality and pride");
101. William J. Preston, A Comparison of the Rationale and Socio-Economic Characteristics of Straight Bankruptcy and Chapter XIII Petitioners in the Denver, Colorado, Area 133 (1969) (unpublished Ph.D. dissertation, Colorado State College) (on file with the Colorado State College Library) (reporting on an interview with a bankrupt who had asked his college age sister to leave the room where the interview was taking place as the petitioner did not want his sister to find out about his bankruptcy filing).
102. See Perry v. Commerce Loan Co., 383 U.S. 392, 395 (1965) ("In [straight bankruptcy] proceedings, everyone lost - the creditors by receiving a mere fraction of their claims, the debtor by bearing thereafter the stigma of having been adjudged a bankrupt.").
103. See Report of the Commission on the Bankruptcy Laws of the United States, H.R. Doc. No. 93-137, Pt. 1 (1973);
104. id. at 15 ("The preponderant majority of debtors desire some means of paying their debts in preference to incurring the stigma and other consequences of bankruptcy.").
105. H.R. Rep. No. 95-595, at 118,
106. reprinted in 5 U.S.C.C.A.N. 5787, 6078-79 (1978).
107. See Howard W. Odum Institute for Research in Social Science, California Field Poll, available at http://cgi.irss.unc.edu/tempdocs/ (Oct. 1982) (finding that 53% of Californians polled would not have voted into public office anyone who had filed for bankruptcy);
108. The Roper Center at the University of Connecticut, Public Opinion Online 1, available at http://www.ropercenter.uconn.edu/ (May 7, 1991) (reporting the findings of an opinion poll that 55% of the 909 adults surveyed by phone indicated that they would not do business or would be reluctant to do business with a former bankruptcy petitioner).
109. See The Roper Center at the University of Connecticut, Public Opinion Online 1, available at http://www.ropercenter.uconn.edu/ (Nov. 6, 1993).
110. See David Caplowitz, Consumers in Trouble: A Study of Debtors in Default 274 (1974) ("Since shame is attached to bankruptcy, many who are eligible for this relief do not seek it, and those who do are likely to pay immeasurable psychological costs.");
111. Kathy R. Davis, Bankruptcy: A Moral Dilemma for Women Debtors, 22 L. & Psychol. Rev. 235, 239 (1998) ("Even though the bankruptcy laws have changed, the stigmatization of filing for bankruptcy and the moral aversion to it remains.");
112. Philip Shuchman, An Attempt at a "Philosophy of Bankruptcy," 21 UCLA L. Rev. 403, 416 (1973) ("Straight bankruptcy is degrading or at least tends to reduce the bankrupt's self-esteem or harm his conception of himself.");
113. Michelle J. White, Why Don't More Households File for Bankruptcy?, 14 J.L. Econ. & Org. 205 (1998) (suggesting that the dramatic disparity between the number of households that actually file for bankruptcy and the number of households that could benefit from filing for bankruptcy may be explained by the presence of stigma that keeps households from filing).
114. See In re Walton, 866 F.2d 981, 987 (8th Cir. 1989) (McMillian, J., dissenting) ("After all, no one really wants to be bankrupt and it is only after financial disaster strikes that anyone would seek to give up and be branded with the stigma of bankruptcy.");
115. In re Raymond, 12 Bankr. 906, 907 (Bankr, E.D. Va. 1981): Bankruptcy is a serious step; it holds its stigmas still. It is a unique judicial process where one is laid bare, financially. And remember this -it results in a court record for future employers, creditors, friends, relatives and the public to see. Would you grant a security clearance to one who cannot manage his financial affairs and files bankruptcy?
116. Freeman v. State, 767 P.2d 1354, 1357 (Okla. Crim. App. 1988) (finding bankruptcy stigma to be substantial, the court precluded the introduction of the defendant's prior bankruptcy filing as evidence during trial "because its probative value is substantially outweighed by its prejudicial effect").
117. But see Bankruptcy -No Longer a Dirty Word, U.S. News & World Report, Apr. 7, 1975, at 52 ("The stigma once attached to taking a financial bath no longer seems to be an important consideration for many modern-day debtors, according to judges in bankruptcy courts across the country.").
118. See, e.g., In re Komyathy, 142 B.R. 755, 756 (Bankr. E.D. Va. 1992) (debtor asking the court to dismiss her voluntary chapter 7 petition on the grounds that she wishes to avoid the stigma of bankruptcy);
119. In re Martin, 30 Bankr. 24,26 (Bankr. E.D.N.C. 1983);
120. In re Blue, 4 Bankr. 580, 582 (Bankr. D. Md. 1980) (the debtors in this case sought to dismiss their petition two and a half months after filing in order to avoid the stigma of bankruptcy);
121. In re Stempler, 441 N.Y.S.2d 800 (1981) (granting a request to change a person's name where the petitioner, who had filed a voluntary petition of bankruptcy 16 years ago, wished to avoid the stigma of the prior bankruptcy adjudication).
122. See The National Opinion Research Center, General Social Survey 1972-2000 Cumulative Codebook, available at http://webapp.icpsr.umich.edu/GSS/ (last visited Jan. 12, 2004) (reporting that 4.4% to 9.6% of the respondents find that bankruptcy filing is an acceptable reason to end one's life).
123. See Teresa A. Sullivan, Elizabeth Warren & Jay Lawrence Westbrook, The Fragile Middle Class: Americans in Debt 32 (2000) [Hereinafter Fragile Middle Class] ("Public identification as a bankrupt debtor is embarrassing at best, devastating at worst. Bankrupt debtors have told us of their efforts to conceal their bankruptcy.");
124. id. at 139 (reporting on bankruptcy stories that reveal "self-loathing and humiliation in recognition of what [bankrupts'] spending habits have brought them to");
125. Jean Braucher, Lawyers and Consumer Bankruptcy: One Code, Many Cultures, 67 Am. Bankr. L.J. 501, 540 (1993) (reporting that lawyers who represent consumer debtors describe their clients' feelings and attitudes as "dejected, ashamed, humiliated," and, although sometimes asserting that "the sense of social stigma about bankruptcy has been waning in recent years," saying that their "clients are still often embarrassed or ashamed");
126. Sheila Driscoll, Note, Consumer Bankruptcy & Gender, 83 Geo L.J. 525, 541 (1994), summarizes comments made during a focus group session of bankrupts as follows: Many [clients] have a strong bias against bankruptcy. They see it not only as a last resort but something bad and they require a lot of counseling for them to appreciate that they need to do it. One said, "My mother would turn over in her grave if she knew I was filing for bankruptcy." . . . They feel [they] have committed a terrible sin and are ashamed to admit.. . they can't pay their bills. They don't want other members of their family to find out, they wonder whether it can be kept out of the newspapers. . . . I had one woman who was crying the whole time she was signing. But it was a matter of either your house in an hour from now, or sign.
127. How They Did it; A Credit Rehabilitation After Bankruptcy Filing, N.Y. Times, May 14, 1994, at 36 ("Along with overcoming financial troubles, he spent about two years recovering from the trauma and the embarrassment of bankruptcy.").
128. See White, supra note 63 (finding that only a small portion of the individuals who efficiently could file choose to do so).
129. See, e.g., State of Wisconsin v. Galdine, 492 N.W.2d 188 (Wis. Ct. App. 1992) (judge concluding that the prejudicial effect of the evidence relating to the prior bankruptcy was limited particularly in light of the reduced stigma associated with bankruptcy filing);
130. Trevor Armbrister, Nation of Deadbeats?, Reader's Digest, Sept. 1998, at 167 ("There is no longer any stigma attached to declaring personal bankruptcy, and some consumers now regard bankruptcy as the latest entitlement - a cost-free way to enjoy the American Dream.");
131. Braucher, supra note 67, at 540 ("many lawyers said the sense of social stigma about bankruptcy has been waning in recent years");
132. Damon Darlin, The Newest American Entitlement, Forbes, Sept. 8, 1997, at 113 ("With the stigma of debt and bankruptcy gone, an increasing number of Americans are filing for bankruptcy.");
133. Editorial, Making it Harder to Dodge Debts, Roanoke Times & World News, May 14, 1999, at A14 ("Bankruptcy, much like unwed pregnancy, seems to have no stigma or shame attached to it these days.");
134. Michael Higgins, Putting Back the Bite, 84 A.B.A. J., June 1998, at 74, 75 (noting bankruptcy's diminishing social stigma as filing have become more common).
135. See, e.g., Mann, supra note 44, at 255 ("there is no evidence that bankruptcy has ever lost its stigma");
136. Jean Braucher, Increasing Uniformity in Consumer Bankruptcy: Means Testing as a Distraction and the National Bankruptcy Review Commission's Proposals as a Starting Point, 6 Am. Bankr. Inst. L. Rev. 1, 7 (1998 ) ("The stigma associated with bankruptcy is difficult to measure. Solid empirical, as opposed to anecdotal, evidence that it has decreased is hard to come by.");
137. A. Mechele Dickerson, Bankruptcy Reform: Does the End Justify the Means?, 75 Am. Bankr. L.J. 243, 267 (2001) ("Though critics claim that the stigma previously associated . . . with filing for bankruptcy has all but disappeared, it is virtually impossible to substantiate that claim.");
138. David B. Gross & Nicholas S. Souleles, An Emprical Analysis of Personal Bankruptcy and Delinquency, 15 Rev. Fin. Stud. 319, 321 (2002) ("The various costs of default, especially social, legal and information costs, are inherently difficult to measure.");
139. Margaret Howard, A Theory of Discharge in Consumer Bankruptcy, 48 Ohio St. L.J. 1047, 1061 (1987) (noting lack of data to support the "psychological dimension of bankruptcy known as stigma");
140. Charles A. Luckett, Personal Bankruptcies, in The Impact of Public Policy on Consumer Credit 69, 76 (Thomas A. Durkin & Michael E. Staten eds., 2001) (noting that "none of the typically cited social or legal factors are easily quantifiable");
141. David A. Moss & Gibbs A. Johnson, The Rise of Consumer Bankruptcy: Evolution, Revolution, or Both?, 73 Am. Bankr. L.J. 311, 327 (1999) ("The biggest problem with the stigma explanation [for the increase in bankruptcy filings] is that we simply do not have much hard evidence regarding the magnitude or significance of bankruptcy stigma, either over time or at a particular moment in time.");
142. Todd J. Zywicki, Institutions, Incentives & Consumer Bankruptcy Reform 31 (2005) (George Mason University School of Law, Law & Economics Working Paper Series, No. 05-07, on file with author) ("empirically measuring changes in broad and diffuse social factors, such as shame and stigma is difficult and [these factors] do not easily lend themselves to direct testing").
143. See, e.g., Fragile Middle Class, supra note 67, at 32 ("Discharging debts that were honestly incurred seems the antithesis of middle-class morality. Public identification as a bankruptcy debtor is embarrassing at best, devastating at worst. Bankrupt debtors have told us of their efforts to conceal their bankruptcy.");
144. Kartik Arthreya, Shame as it Ever Was: Stigma and Personal Bankruptcy, 90 Fed. Res. Bank Rich. Econ. Q. 1, 3 (2004) ("Therefore, a main conclusion of this article is that stigma is by no means dead.");
145. Teresa A. Sullivan, Bankruptcy and the Social Meaning of Credit 10 n.6 (June 1991) (unpublished paper presented at the annual meeting of the Law & Society Association in Amsterdam, on file with author);
146. Deborah K. Thorne, Personal Bankruptcy through the Eyes of the Stigmatized: Insight into Issues of Shame, Gender and Marital Discord 73, 78-79, 94, 267 (2000) (unpublished Ph.D. dissertation, Washington State University) (on file with author) (based on survey results of petitioners, the researcher found that prior to filing, the majority of bankruptcy petitioners viewed bankruptcy as stigmatizing, were reluctant to file and did not want their friends and family to know about their filing); White, supra note 63, at 205 (estimating, based on a national sample, that at least 15% of households could benefit from filing for bankruptcy, yet the personal filing rate represents less than 1% of the adult population. The author suggests that one explanation for the disparity is the powerful influence of stigma);
147. Frederick C. Yeager, Personal Bankruptcy and Economic Stability, 41 S. Econ. J. 96 (1974) (pointing to the stable relationship over time between the personal filing rate and the household debt-to-income ratio as an indication that a change in bankruptcy stigma was unlikely).
148. See, e.g., Visa, Consumer Bankruptcy: Causes and Implications (1996) (claiming that a reduction in stigma and changes in other social factors prompted the rise in personal bankruptcy filings between 1981 and 1996);
149. F.H. Buckley & Margaret F. Brinig, The Bankruptcy Puzzle, 27 J. Legal Stud. 187, 188 (1998) (concluding that a lessening of stigma and other social norms was responsible for the increase in personal bankruptcy filing rates between 1980 and 1991);
150. Scott Fay et al., The Bankruptcy Decision: Does Stigma Matter? (Jan. 1998) (University of Michigan Working Paper 98-01, on file with author) (asserting that a reduction in stigma of bankruptcy contributed to the increase in the personal bankruptcy filing rate in the early 1990s);
151. David B. Gross & Nicholas S. Souleles, Explaining the Increase in Bankruptcy and Delinquency: Stigma Versus Risk-Composition (1998) (unpublished manuscript, on file with author) (claiming that a reduction in stigma led to a rise in the number of bankruptcy filings between 1995 and 1997).
152. See Paul C. Bishop, A Time Series Model of the U.S. Personal Bankruptcy Rate 1, 8 (1998) (FDIC Bank Trends series) (finding a "large difference" between actual bankruptcy filing rates and the rates that would be predicted based on various household economic distress indicators, which "suggests that there are other factors of importance," such as changes in social norms);
153. Buckley & Brinig, supra note 72, at 188 ("the explosion in bankruptcy filings is in substantial part attributable to a shift in social norms [not legal] and economic variables");
154. Scott Fay, Erik Hurst & Michelle White, The Household Bankruptcy Decision, 92 Am. Econ. Rev. 706, 716 (2002) ("These results are consistent with local trends occurring in which increases in a district's bankruptcy filing rate cause attitudes toward bankruptcy to become more favorable and therefore individual households' probability of filing rise.");
155. David B. Gross & Nicholas S. Souleles, An Empirical Analysis of Personal Bankruptcy and Delinquency 22 (1998) (Wharton Financial Institutions Center Working Paper 98-28) (showing credit card holders 1% more likely to file bankruptcy in 1997 than 1995, controlling for household risk-composition along several dimensions. The authors' interpretation is that bankruptcy stigma has decreased).
156. See The Rise in Personal Bankruptcy: Causes and Impact: Hearing Before the Subcomm. on Commercial and Admin. Law of the House Comm. on the Judiciary, 105th Cong. 18019 (1998) (testimony of Stuart A. Feldstein, President of SMR Research) (finding that "cities with high bankruptcy filing rates usually do have higher levels of lawyer advertising than cities with low filing rates");
157. Diane Ellis, The Influence of Legal Factors on Personal Bankruptcy Filings 98-103 (1998) (FDIC Bank Trends series) (finding that increases in the rate of bankruptcy filing have correlated strongly with increased expenditures on legal advertising following a 1977 Supreme Court decision that struck down restrictions on such advertising, Bates v. State Bar of Arizona, 433 U.S. 350 (1977)).
158. See John M. Barron et al., Monitoring the Household Sector with Aggregate Credit Bureau Data, 2000 Bus. Econ. 63, 71 (using the proxy of population density levels to ascertain the role of social norms in bankruptcy filing);
159. Buckley & Brinig, supra note 72, at 188 (the authors regressed the consumer bankruptcy filing rates for 86 districts against legal, economic and social variables. Variables used as proxies for the strength of social networks were rates of migration and the percentage of the population living in a metropolitan area. They concluded that legal and economic variables were unable to account for the increase in filing rates, but that social variables were "powerful predictors" of filing rates);
160. Fay, Hurst & White, supra note 73, at 712 (using cross-section data, the authors tried to identify time series trends within various communities that suggest a lower level of disapproval of bankruptcy over time in given communities);
161. Teresa Sullivan et al, As We Forgive Our Debtors 244-46 (1989) (noting correlation of migration history with propensity to file bankruptcy).
162. See VISA, 2000 Life After Bankruptcy Study 5 (2000) ("The increasing trend in the number of people learning about bankruptcy through friends and family members has been demonstrated in each annual debtor survey, and is once again confirmed in this study.");
163. VISA, Consumer Bankruptcy: Annual Bankruptcy Debtor Survey 2 (1997) ("Fully 45.3 percent of the respondents said they learned about bankruptcy as an option from friends or family. That's a substantial increase over the previous year's 10.5 percent and, taken together with other research information, suggests a further weakening of the once strong social stigma against bankruptcy.").
164. See Consumer Debt: Hearing Before the House Comm. on Banking and Financial Services, 104th Cong. 331 (1996) [hereinafter Consumer Debt Hearing] (testimony of Dr. Lawrence Chimerine, Managing Director and Chief Economist of Economy Strategy Institute and Consulting Economist for MasterCard International Incorporated): The share of bankruptcy filers who have never been delinquent on any loan appears to now be 50% or higher, and has risen sharply in recent years. This suggests that factors other than debt are increasingly driving the process. This is far different than the situation which prevailed in earlier decades, when bankruptcy was generally a last resort. . . . Today, bankruptcy is increasingly becoming first option, and the old time profile no longer appears to be representative.
165. Bankruptcy Law Revision: Hearing Before the Subcomm. on Commercial and Admin. Law of the House Comm. on the Judiciary, 105th Cong. 5 (1998) (testimony of Mallory B. Duncan, Vice President, General Counsel of National Retail Federation) (noting that for many retailers "more than 40% of the bankruptcy petitioners received are from customers (often long-standing) who are not seriously delinquent").
166. See Consumer Debt Hearing, supra note 77, at 428-29 (written statement of VISA U.S.A. Inc.): Of course, there are many reasons for these [personal bankruptcy filings] increases. But surely one reason is that bankruptcy no longer appears to carry the social stigma it once did. ... In a Visa survey of individuals who filed for bankruptcy during a 12-month period in 1995 and 1996 . . . less than half of the respondents sought credit counseling before deciding to file for bankruptcy, further evidence that an increasing number of people appear to choose bankruptcy as the "solution" to their financial difficulties rather than as a "last resort."
167. See id. (concluding that bankruptcy no longer carriers the stigma it once did, the author refers to the results of a survey of bankruptcy petitioners finding that "almost 14% of the respondents had filed for bankruptcy two or more times").
168. See Congressional Budget Office, Personal Bankruptcy: A Literature Review, at xi (2000): Several studies maintain that the social stigma associated with filing for bankruptcy plays a significant role in determining the filing rate, but at best, those findings are merely suggestive. Because direct measures of stigma do not exist, the studies used other variables as proxies -that is, to approximate the effects of stigma. However, the proxy variables did not isolate stigma's influence on the filing rate. . . . Consequently, the studies probably overstated the effects of stigma.
169. Fragile Middle Class, supra note 67, at 264 ("Most recent analyses of the 'decline in stigma of bankruptcy' do not use any direct measure of stigma.");
170. Thorne, supra note 71, at 70 (criticizing a previous study, that relied on bankruptcy proxies to conclude that bankruptcy stigma has declined, for failure to operationalize the crucial independent variable of stigma);
171. Gross & Souleles, supra note 73, at 3: Unfortunately it has been difficult to disentangle the risk and stigma effects empirically. First, it is not obvious how to operationalize the stigma effect. Most of the proxies for stigma that have been suggested run into the problems of endogeneity and reverse causality. For example, consider using the number of advertisings by bankruptcy lawyers as an inverse proxy for stigma. The problem is that an increase in ads might not be the cause of the rise in bankruptcies, but rather their effect.
172. See Margaret Howard, Bankruptcy Empiricism: Lighthouse Still No Good, 17 Bank. Dev. J. 425, 453 (2001) (book review): researchers who have attempted to study the stigma of bankruptcy have done so by looking at debtors. . . . Until a statistically valid study of the general population's attitude toward the stigma of bankruptcy is undertaken, we should have no patience with assertions of declining stigma or with arguments for statutory change that are justified by resort to those assertions.
173. Zywicki, supra note 70, at 62 n.256.
174. Of the 176 newspaper articles published, 69 were published before 1970 and 107 were published subsequently.
175. See Philip O. Buck et al., Media and Professional Interest in Homelessness Over 30 Years, 4 Analyses Soc. Issues & Pub. Pol'y 151 (2004) ("In addition to the possibility that media coverage may influence public opinion, media coverage may also reflect public opinion .. ..");
176. Yael Har-Even, Emigration as a Social Problem: Emigration from Israel as Reflected in "Letters to the Editor" of Ha'Aretz, 1949-1987, at 52 (unpublished M.A. thesis, Tel-Aviv University) (on file with the Tel-Aviv University Library) (employing content analysis of letters to the editors to evaluate shifting public opinion in Israeli society regarding emigration from Israel);
177. Steve Stemler, An Overview of Content Analysis, 7(17) Prac. Assessment Res. & Evaluation (2001) ("Additionally, content analysis provides an empirical basis for monitoring shifts in public opinion.").
178. See, e.g., After the Frauds Among Bankrupts, N.Y. Times, Nov. 4,1923 (referring to an increase in fraudulent bankruptcies as "evil" and as "commercial lawlessness");
179. Judge Hough on Bankruptcy Frauds, N.Y. Times, Jan. 17, 1912, at 14 (referring to bankrupts as an army of swindlers);
180. The Bankruptcy Inquiry, N.Y. Times, June 12, 1881 (asserting that debtors in bankruptcy cheat their creditors);
181. Competing with Fraud, N.Y. Times, May 10, 1878 (referring to petitioners as evil and declaring that bankruptcy filing is a product of fraud committed by petitioners and amounts to a manifestation of shrinking values);
182. Fraudulent Failures, N.Y. Times, April 23, 1878, at 1 (referring to bankruptcy filings as "fraudulent failures" and suggesting that bankruptcy law promotes fraud);
183. The Bankruptcy Act, N.Y. Times, Feb. 29, 1868, at 1 (emphasizing a bankruptcy amendment provision that refers to debtor's fraud and deceit).
184. See, e.g., David J. Morrow, Key to a Cozier Bankruptcy: Location, Location, Location, N.Y. Times, Jan. 7, 1998, at Al ("More bankruptcy filings, critics say, have translated into more abuses.");
185. Saul Hansell, Battle Emerging on How to Revise Bankruptcy Law, N.Y. Times, Oct. 19,1996, at Al (referring to petitioners as deadbeats);
186. Clint Willis, Your Money: Caution Advised on Bankruptcy, N.Y. Times, Mar. 12, 1988, at A38 ("Some employers assume that a bankruptcy filing indicates that a person is irresponsible or untrustworthy.");
187. id. (declaring that extravagant spending leads to more bankruptcies);
188. Michael deCourcy Hinds, Are Changes Needed in Bankruptcy Laws?, N.Y. Times, May 31, 1982, at B1 ("Today, it is fashionable for these debtors to take straight bankruptcy not as a matter of need but out of convenience.").
189. See, e.g., Martin Fisher, Better Bankruptcy, N.Y. Times, Oct. 26, 1997, at IV. 14 ("Most bankruptcy cases are filed by ordinary middle-class people who are employed and contribute to society.");
190. Tamar Lewin, Lively Debate on Bankruptcy, N.Y. Times, Aug. 9,1983 ("it would be wrong to deny a fresh start to poor people who have gotten into debt");
191. William Robbins, Why 5 People Found Themselves in Bankruptcy, N.Y. Times, Oct. 2, 1982, at C1 (providing accounts of petitioners who are hard working and honest but failed due to reasons beyond their control);
192. William E. Geist, Rising Bankruptcies in Suburbia, N.Y. Times, Mar. 30,1982, at II.2 ("The people filing for bankruptcy now are decent, hard-working people, not phonies. They just wanted to live the American Dream and now find it costs too much.").
193. See, e.g., Peter Kilborn, Mired in Debt and Seeking a Path Out, N.Y. Times, Apr. 1, 2001, at I.I (including a picture of petitioners holding their grandson. The petitioners were described as an unemployed disabled couple);
194. Robbins, supra note 86 (portraying petitioners in a positive light using pictures of three petitioners, all of whom are serious, thoughtful and dressed respectably).
195. See, e.g., Bankruptcy Debate, N.Y. Times, May 16, 1983, at IV.2 (indicating that pro-debtor bankruptcy groups include consumer rights group, civil rights groups and labor unions);
196. Robert A. Wright, Personal Bankruptcies are Rising, N.Y. Times, May 9, 1971, at III.3 ("[Bankruptcy] gives them a fresh start . . . . Otherwise, their problems would drive them to drink, narcotics, or suicide. Bankruptcy is a very human course.").
197. See Nick Ravo, Personal Bankruptcies Mounting with the Trepidation Lessening, N.Y. Times, Jan. 21, 1991, at B4 (attributing bankruptcy to business failure, loss of job, mounting household debt, declining home equity, ailing economy, and unemployment);
198. Willis, supra note 85 ("circumstances like prolonged illness or job loss also account for many bankruptcies");
199. id. ("People who are sued for repayment of debt or who face imminent foreclosure on their home may have little alternative but to file for bankruptcy.");
200. Hinds, supra note 85 (suggesting that rising bankruptcy filings are a product of a depressed economy and unemployment).
201. See, e.g., Kilborn, supra note 87 ("But many of the Americans who go bankrupt have only hard luck to blame.");
202. Legislation to Overhaul Laws on Bankruptcy Dies as President Fails to Sign It, N.Y. Times, Dec. 20, 2000, at A32 (attributing bankruptcy filings to "unforeseen hardships" among other things);
203. Saul Hansell, Personal Bankruptcies Surging as Economy Hums, N.Y. Times, Aug. 25, 1996, at Al (attributing bankruptcy filings to serious illness, divorce, and medical bills, among other things).
204. See, e.g., Hansell, supra note 90 (attributing bankruptcy filings to lack of a safety net, among other things).
205. See Robert Bennett, Who Pays for Bankruptcies, N.Y. Times, June 3, 1983, at D2 (congressman attributing increase in bankruptcy filings to a Supreme Court ruling allowing lawyers to advertise).
206. See, e.g., Philip Shenon, Senators Adopt Tougher Rules on Bankruptcy, N.Y. Times, March 16, 2001, at Al ("The bill's critics say that credit card companies and other lenders are themselves largely to blame for the explosion in bankruptcy specifically, that their mass solicitations for high-interest credit cards and other loans have encouraged irresponsible spending that has landed borrowers in bankruptcy court.");
207. Stephen Labaton, House Votes to Make it Tougher to Escape Debt Through Personal Bankruptcy, N.Y. Times, May 6, 1999, at A28 (reporting that "the record number of personal bankruptcies was as much a result of the easy extension of credit");
208. Hansell, supra note 90 (describing practices of credit card companies of giving higher credit to people they previously shunned and suggesting that the lenders may be most responsible for bankruptcy's growing appeal by showering Americans with unsolicited credit cards);
209. Robert Bennett, supra note 92 ("The problem [of rising bankruptcies] is not the bankruptcy law itself but profligate lending by banks and finance companies.").
210. See New Bankruptcy Law: Creditors, Debtors Aided, N.Y. Times, Oct. 19, 1979, at Dl (concluding that bankruptcy reform provides "protection" for petitioners).
211. See Robert Hershey Jr., Creditors Lead Push to Curb Bankruptcy, N.Y. Times, May 10, 1998, at 111.10 (asserting that proposed bankruptcy legislation "constitutes an assault on the long-established principle that society needs a mechanism to give the hopelessly indebted a fresh start");
212. Ravo, supra note 89 ('"Bankruptcy has a bad name,' Mr. Carron, the Westport lawyer, said. 'What it really is is the Federal Fresh Start program.'").
213. See, e.g., Hansell, supra note 90 ("Bankruptcy often looks like a good deal").
214. See, e.g., Morrow, supra note 85 ("Some lawmakers contend that declaring personal bankruptcy is now too easy . . . .");
215. Hansell, supra note 90 (describing informality and ease of the bankruptcy process);
216. Personal Bankruptcy: Creditors, Debtors & Ethics, N.Y. Times, Oct. 12, 1975, at 111.16 (suggesting that bankruptcy is an easy process).
217. See generally Roger Kimball, The Long March: How the Cultural Revolution of the 1960s Changed America (2000).
218. The only other statistically significant relationship was identified using a simple regression between mean annual ratings and the unemployment rate. The relationship was significant at about .02. The R-square was low, however. Hence the relationship was weak but significant. Interestingly, the relationship was negative. That is, the higher the unemployment rate, the more negatively bankruptcy petitioners were viewed in society.
219. See Ronald J. Mann, Credit Cards, Consumer Credit, and Bankruptcy (March 2005) (University of Texas School of Law, Law & Economics Working Paper Series, Number 044, on file with author).
220. See Fay, Hurst & White, supra note 73, at 1.