Congress recently passed the Bankruptcy Prevention Prevention and Consumer Protection Act, designed to minimize frivolous bankruptcy filings and to require debtors to repay some of their debt. Once it takes effect in October, 2005, the law will make it harder for those with problem debt to have their debt wiped away by the courts. Most will have to agree to a five-year repayment plan. In passing this new law, members of Congress suggested that our bankruptcy cases are filled with cases involving not regular citizens, but with reckless gamblers, shoppers, and drug abusers. Is that really the case?
One would think, given the complaints, that the highest bankruptcy rate in the Untied States would be in place where such vices were common, such as California, New York or even Nevada. If problem gambling is thought to be the cause of so much bankruptcy, then one might assume that Las Vegas would be the bankruptcy capital of the world. How odd it is, then, to discover that Utah, one of only two states that prohibiting gambling completely, has the highest total incidence of bankruptcy filings in the United States. Utah? How can that be?
Utah has a number of aspects that, taken on their own, do not suggest that bankruptcy would be a problem. Added together, however, these things create a recipe for disaster:
The combination of large families, few workers at family, church donors and low wages have contributed to an economic environment that makes it very hard for many Utahns to stay afloat financially. This is in direct contrast with the arguments put forth by Congress when the new bankruptcy law was proposed, which suggested that most people filing for bankruptcy are simply irresponsible. For many hard-working people in Utah, the new law will make it harder than ever to make ends meet.