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Bankrupt people are failures, losers, flops and washouts. People who have no moral values are morally bankrupt. Those who lack smarts are intellectually bankrupt.

Or at least that's how it was when bankruptcy carried a stigma.

Today, handsome, well-spoken lawyers appear on television and radio, or stare out from bus-stop ads, calling bankruptcy a fresh start, a renewal, a chance for people to erase their debts and begin anew.

The message is getting through. Loud and clear.

These may be good times for the U.S. economy, but the 1990s are the Decade of Bankruptcy.

More than 1.1 million Americans declared personal bankruptcy last year, a record. Even more people will go broke this year.

In just the first three months, 335,000 people ended up in bankruptcy court. That's more than the total number who declared bankruptcy in 1980.

Business bankruptcies have remained fairly stable. But nearly one of every 100 families said that's it, we're filing, we can't stand the dunning telephone calls and letters any longer.

Seventy percent of those people had virtually all of their debts wiped out. The rest went on payment plans and repaid as little as two cents on the dollar.

It's even worse in Western New York. Bankruptcies here are up 34 percent. Nearly 37,000 people filed for bankruptcy in Buffalo so far in the 1990s.

Why is this happening?

Buffalo News interviews with debtors, creditors, attorneys and bankruptcy experts as well as a case-by-case look at recent filings show that:

Credit card spending is out of control. People making as little as $10,000 a year are carrying plastic debts of $50,000 or more. A family in Clarence Center filed for bankruptcy this year owing nearly $340,000 on credit cards.

Fraud, abuse and questionable use of bankruptcy are growing. Some lie about assets to hide money from creditors. Others run up huge credit card bills just before filing for bankruptcy and walking away from the debt.

Bankruptcy attorneys are increasingly persuasive. They flood the airwaves with slick commercials advertising bankruptcy as an attractive way to escape debts. Bankers claim the ads seduce people when they could pay off their bills.

Public attitudes have changed. Twenty years ago, it was considered embarrassing to file for bankruptcy.

"We're becoming a nation of people who use bankruptcy like a little pill that they can swallow and make all their financial problems disappear," said Bruce Jackson, a sociologist at the University at Buffalo's Center for Studies in American Culture.

Casinos add to the problem. Although gambling is seldom listed on bankruptcy petitions, experts say it is having more of an impact.

Last year's opening of Casino Niagara stacked the deck for problem gamblers. A retired police officer from Buffalo listed gambling debts of $50,000 in a year, much of it at the new casino.

More retirees are going broke. Ten percent who filed for bankruptcy here in the first two weeks in May were retired. Most had credit card debts they could no longer afford once they quit working.

Others, like David Knight, have run into problems because they are unemployed and tried meeting expenses with plastic.

Two years spent running up the limits on 38 credit cards left Knight worse than broke.

Knight, a former Blasdell resident and warehouse supervisor, filed for bankruptcy in April 1996. Divorced and unemployed, he had $27 in his pocket. He owed $226,438 on his credit cards.

Knight walked out of Buffalo's Bankruptcy Court 14 months later. He worked out a payment plan that allows him to repay two cents on the dollar.

All Knight did to wipe out his debts was attend a few, brief meetings and fill out several financial reports. He paid $825 to his lawyer and a $160 court fee. The only thing he lost in the deal was his 1992 LeSabre.

When it was over, his debts passed on to banks and retailers, who eventually will pass most of their losses on to consumers.

Knight, 31, moved to South Carolina several months ago and now works as a plant janitor there. He said a job layoff was the main reason for his bankruptcy, and he concedes he tried to use credit cards to make ends meet.

But Knight insists most of his nearly quarter-million dollar credit card debt was interest. He did not live an extravagant lifestyle and mostly used the credit cards to meet day-to-day expenses.

"I am embarrassed and ashamed," Knight said. "I was brought up in a working family where you did your job and paid your bills. I was out of work for eight months. I had bills, but no income, and I felt I had no other choice.

"If I won the lottery, I would tell my lawyer to reopen the case and pay off all these debts," he said.

Knight's attorney, Harold P. Bulan, said most people he helps file for bankruptcy are like Knight. They spend foolishly and end up embarrassed, at the end of their ropes.

"I think most of these people hope to someday pay off their debt, but they get so far behind that they never do," Bulan said.

Court officials say others set out to scam the system -- running up huge credit card debts they know they can't possibly pay off. And although that practice is illegal, most get away with it because those running the court system are too busy to catch them.

The system is so inundated that little double-checking is done unless a complaint is made. The FBI and the U.S. Trustee's office, the agencies responsible for uncovering bankruptcy fraud and abuse, mainly investigate complaints instead of searching for abuses.

"I couldn't believe how easy it was to file," said David Licht, a Buffalo man who filed for bankruptcy in May. "I did not cheat the system, but I saw how easy it could be if you wanted to cheat. The court takes your word for a lot of things."

Experts cite the astronomical rise in credit card spending as the biggest reason for the bankruptcy boom.

Consumers in this country now owe half a trillion dollars for credit card purchases, according to the Federal Reserve Bank. And that amount has doubled since 1993.

A News study of 324 personal bankruptcies filed here in the first two weeks of May showed the average credit card debt was $19,177 per family.

Most bankruptcies are filed by middle-class people who used the cards to spend much more than they could afford.

"I'll tell you what's driving people to bankruptcy -- the easy, easy access to credit, and the emphasis on instant consumption," said Richard Schroeder, a certified financial planner from Amherst.

"People have gotten to the point where they need multiple gadgets and conveniences to be happy. Instead of having one television set like we did in the '50s, we see people who have a color TV in every single room.

"The ethic used to be, if you wanted to buy something, you saved for it," said Schroeder. "People joined Christmas savings clubs to save up for Christmas presents. Today, with credit cards, it's strictly 'buy now, pay later.' "

The problem for many people, he said, is the "pay later" part never comes.

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