New Bankruptcy Laws: A Lesson in Being Condescending - Can You Ward Off the Media's Spell of Credit, Entitlement and Impulsivity?

Unless you are in the minority of Americans who are very financially secure, you are probably aware that the bankruptcy laws have recently changed. In an attempt to stop "bankruptcy abuse", in 2005, President Bush signed into law a reform making bankruptcy more difficult, and forcing more people to file under Chapter 13 repayment plans instead of Chapter 7, which clears out debts entirely after liquidating the debtor's assets.

This new bill requires the debtor to attend several credit counseling classes in addition to the traditional bankruptcy meeting with creditors and trustees. Having been through a post-bill bankruptcy, and observed all the new steps and utterly condescending "counseling" they mandate, this writer decided to bring a few things to light, and personally respond to the not-so-subtle implications that low to middle-class families are irresponsible, ignorant, and greedy.

The vast majority of bankruptcies filed by consumers, some 1.6 million in 2004, are filed due to enormous medical bills. Lack of assistance by a mediocre or a complete lack of medical insurance leaves the person with excessively large bills they could never hope to pay, although you will find it is to their own shame. The average person wants to pay their bills and handle their responsibilities, most people are happiest this way. However, getting insurance is not easy if you are working class and have only a high school education. Employers are becoming increasingly unwilling to hire on full-time employees to prevent insurance costs, resulting in not only uninsured people but lower pay to unskilled workers.

This lack of insurance and adequate income makes bill-paying a downward spiral that eventually results in debt. Most agree that the majority of Americans today are one medical crisis away from bankruptcy. President Bush, who upon signing the new reform into law stated, "America is a nation of personal responsibility, where people are expected to meet their obligations, if someone does not pay his or her debts, the rest of society ends up paying them."

Also at great fault, are credit issuers who bombard target demographics with offers (an average of 18 applications for every man, woman and child in America in 2004), who may or may not have the means to pay, after their worse-than-the-mafia late fees and interest rates drag them into a financial pit. In fact, MBNA, who provided over $400,000 towards the Bush campaign between both his terms (and apparently allowed him the use of their corporate jet), spent $20 million lobbying Congress to implement the bankruptcy reform, which they largely constructed.

The law brought in more money to MBNA, $ 2.6 billion added to their yearly profits, making them one tasty fish when Bank of America came biting. B of A bought MBNA for 31% more than the company's value at that time: $35 billion dollars. According to a lawyer for the American Banking Association, Phillip Corwin, the new reform was passed to cut back on bankruptcy abuse, not to add to the profits of credit-card companies. A good example of giant money punishing small money.

In America, corporations pour money into market research, which develops ways to appeal to the local consumer psychologically. Marketing also knows, as does any sociologist, that human beings require social acceptance to be healthy. Marketing today has inspired a nation-wide sentiment of want/need thinking and a raging sense of entitlement. Terms like "I deserve" and "you deserve" are coined more frequently than the products they sell. Society today is led to believe that having possessions and displaying items is a sign of personal accomplishment, and is not only socially acceptable but socially required. That message is glaringly displayed as commercials shamelessly push consumers to buy, buy, buy, so you can have the best, best, best!

The message is clear: to pull away from the above sentiment, is to pull away from society, which leads to isolation. Most people have a strong social network where statuses are created and maintained, as with any complex human interaction. When people feel inadequate due to what they see as failure to live up to a social norm, not only are they ostracized by other members of the group, but their mental well-being is damaged. All of those facts are not unknown to marketing experts who choose to use human nature against itself and cause a person to choose social acceptance over what could result in personal loss. It is in fact, quite against human nature to go against a group or norm.

While there is personal responsibility involved in financial decisions, one cannot simply ignore a nation-wide message to be impulsive. Asking people to act independently of what seems to be what everyone else is doing (and are happy, sexy, rich, beautiful, successful, etc while doing it), is a classic example of the failed parental saying, "do as I say, not as I do."

References and places of interest:

http://www.corpwatch.org/article.php?id=12911 "Bankruptcy reform a boon"

http://householdwatch.com/wp/2005/04/20/bush-signs-new-bankruptcy-bill-predatory-lenders-benefit

http://money.cnn.com/2005/04/20/pf/bankruptcy_bill/index.htm

http://www.wsws.org/articles/2005/apr2005/bank-a23.shtml