As Congress struggles to agree on the exact wording of a much harsher
bankruptcy statute (now commonly referred to as "BARF" even though it
hasn't been enacted yet), I would like to propose an alternative. My
alternative is simultaneously harsher, more humane and more honest
about its true intentions than any language now before Congress. It
is likely also somewhat more favorable to creditors than anything
Congress is now considering. My alternative is suggested by one
passage from the Bible and two passages from the Constitution:
"The rich rule over the poor, and the borrower is servant to the
lender."
Proverbs 22:7
"The Congress shall have the power… To establish… uniform Laws on the
subject of Bankruptcies throughout the United States."
U.S. Constitution, Article I, Section 8, cl. 4.
"Neither slavery nor involuntary servitude, EXCEPT as a punishment for
crime whereof the party shall have been duly convicted, shall exist
within the United States, or any place subject to their jurisdiction."
U.S. Constitution, Amendment XIII, Section 1 (emphasis added)
Yes, I propose that personal bankruptcy be made once again into a
minor criminal offense, treated as being an act of the same kind as a
simple theft or an unintentional fraud, as it was at common law. I
further propose that the punishment for the crime of bankruptcy be a
term of involuntary servitude of the bankrupt to his or her creditors
or creditors' committee for a number of months proportional to the
amount of his or her debt remaining after the sale of all assets. A
bankrupt's family should be eligible for public assistance during the
term of his or her involuntary servitude, and the cost of providing
that assistance, plus any additional court-awarded child or spousal
support, should be figured into the term of servitude. Of course, if
the dominant creditor or creditor's committee has no use for the
bankrupt's services, the committee should be allowed to sell those
services to others for as much as the market will bear. The debtor
should be absolutely absolved of all debts after his or her term of
servitude is completed.
The Constitution requires only that, if Congress establishes a rule
for bankruptcies, that rule must be uniform. It does not require
Congress to provide discharge after sale of the debtor's assets, and
Congress has for some years been gradually extending the list of debts
that are non-dischargeable. In recent times, Congress has also been
making it increasingly difficult to discharge ordinary consumer
debts—which is very much the objective of the most recent bill. But
the hidden effect of all this is to impose bondage. Roughly 35 to 40
years ago, the "banking industry" in this country began to actively
transform itself into the "credit industry." The difference between
the two is this: where the banking industry perceived its role as
mostly providing a service to its customers, the credit industry
perceives its role as selling a product. The product the credit
industry sells is consumer debt. Consumer debt is now very actively
sold, through mass mailings (I get at least 5 or 6 per week) offering
credit cards, through advertising campaigns urging the public not only
to obtain particular credit cards but also to use those cards to
purchase consumer goods, and through building EXPECTATIONS into the
system nearly everywhere (even doctor's offices, as I am well aware)
that not having money for a "needed" purchase is no excuse because one
is expected to have and to use a credit card. The credit industry has
done a good job of selling us all consumer debt, making us the
servants of the credit card companies.
At the same time, the federal government has been selling its own
versions of debt bondage. When I went through college (and I'll admit
I went through way too much of it), it was EXPECTED that I would be
able to attend full-time because I'd be able to take
federally-guaranteed student LOANS to pay for it. Similarly, when one
starts a small business, it is expected that most of the financing
will come from a federally-guaranteed loan. Federal loan guarantees
are also used for housing for ordinary people. Many years ago,
Congress made these federally-guaranteed loans difficult to discharge
in bankruptcy, and, over the years, these provisions have been
tightened several times, making discharge of these loans nearly
impossible. Uniform and efficient remedies have also been created for
the collection of these federally-insured debts. All that is really
happening on the last few amendments of the Bankruptcy Code is that
the sellers of private consumer debt have been demanding, and
receiving, greater equality with the federal government and the
holders of federally-insured debts.
The direction this is all going is, of course, a system in which
bankruptcy will only be useful to business debtors. Enrons will be
permitted to die in bankruptcy and take their employees' retirement
savings with them. K-Marts will be permitted to reorganize and go on
with their business, after eliminating employees and paying only a
part of their debts. If Bill Gates ever needs to take bankruptcy to
"adjust" some of his business debts, he will undoubtedly come out OK.
But all types of debt held by ordinary people will be either very
difficult or impossible to discharge. Consumer debt, whether
federally-insured or not, will become an inescapable servitude once
one gets in over his or her head, for whatever reason.
All I'm proposing is that we get on with this process that must
inevitably occur and that we be honest about what we are doing. Call
servitude what it really is, declare it to exist by judicial act in a
bankruptcy proceeding, and provide by law how long it shall last.
Provide for the bankrupt's family during the period of servitude.
Then provide a real discharge when the court's sentence has been fully
served.
Ian Johnson
URL of my resumé:
http://www.christian-oneness.org/authors/
*********
Appendix – My personal situation
I have made a number of foolish decisions, which have left me securely
chained in debt. First, I stayed in college far too long, financing
the last few years of the trip with student loans. I did this with
the honest expectation that I'd be able to make the full required
payments on the loans when I got out with my salary as a lawyer (most
of these debts were to finance law school). However, I manifested a
mental illness, diagnosed several years later as bipolar disorder,
during my last semester in law school. While I finished my law
degree—with high distinction, no less— in 1982, I was unable to obtain
a license to practice. After the condition had been diagnosed ,
treated and put into remission for a number of years, in 1992, I
applied to take the bar exam but the Kansas Supreme Court rejected
this application primarily on the grounds that, though my condition
was in long-term remission, it was not permanently "cured" beyond any
possible need for future treatment. When I then sought a remedy in
Federal court under the Americans With Disabilities Act, that court
agreed that the rule the Kansas court had announced to me was that I
needed to be "cured," but declined jurisdiction under the
"Rooker-Feldman doctrine" on the grounds that the Kansas Supreme Court
had not promulgated any formal, written rule on the subsject. (See
Johnson v. Kansas Supreme Court, 888 F.Supp. 1073 (D. Kan 1995). All
of this, however, did not keep the loans from becoming payable. I had
foolishly gambled with other people's money, and had lost the wager.
After various deferments and forebearances, all of which incurred
interest charges, in 1991 I finally obtained my present job as a
paralegal. I now made enough money (although just barely enough) that
payment of the loans could no longer be delayed under the student loan
regulations. But I also had very large medical expenses for one of my
children, incurred while I was unemployed. The combination was more
than I could work out. I filed under Chapter 13 of the Bankruptcy
Code. For the 4 years I was paying on the Chapter 13 Plan, I could
even afford the payroll deduction for health insurance benefits for my
family. But then the Chapter 13 Plan was over, and I found that I
owed my student loan guarantee agency, the Iowa College Student Aid
Commission, the full amount of principal with which I had entered the
bankruptcy plus (they claimed, though I have always protested this)
all interest accrued while the plan was running. Sizable monthly
payments were once again due and payable. Then, within 18 months
after my Chapter 13 Plan ended, there occurred a series of THREE
separate increases in health insurance premiums under my employer's
group plan. After the last of these premium increases, the family
coverage portion of the premium (the portion which I paid), was over
$750 per month, which was then about half of my take-home pay. We had
to drop the family health insurance coverage so that I could keep
making the minimum expected payments on my student loans.
Things went OK until about two years ago. At that point, medical
expenses for two of my children, including about $200 per month in
prescription costs for more than a year in addition to the physicians'
fees, put things completely over the edge. We didn't have the money
to pay for most of the doctor visits or for the drugs, but where
children are involved the State lets you know that lack of funds is NO
EXCUSE. If you don't qualify for income-based medical subsidy
programs, you are firmly EXPECTED to use credit, and we did. However,
now that my wife has been diagnosed with a serious but treatable
condition, we don't even have credit available to pay the roughly
$1400 we need up front. Lack of funds is still NO EXCUSE, so I will
just have to be guilty. My student loans and credit cards must be
paid on time FIRST. Perhaps Congress will act promptly on my
proposal, so that I can become a slave and my family's medical needs
can be met.
URL to donate to me:
http://www.angelfire.com/weird2/ian_j_site2/pride.html
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