Lack Of Personal Responsibility Blamed For Surge In Bankruptcies

As the debate over federal bankruptcy laws revives in Congress, blame for the soaring rate of filings is being pinned on all kinds of folks: consumers, credit card issuers, movie stars and even the rancher who borrowed to buy 50 cows.

At a Senate subcommittee hearing Wednesday, among those blamed for what is viewed as a national bankruptcy crisis were actors Burt Reynolds and Kim Basinger and singer Toni Braxton - all of whom have filed for bankruptcy protection.

Whoever’s at fault, the situation clearly is getting worse. The number of Americans filing personal bankruptcies last year jumped to 1.3 million - up more than 300 percent since 1980 - intensifying criticism that people take court protection from creditors too lightly.

“The most disturbing trend … is the lack of personal responsibility for one’s actions,” Sen. Lauch Faircloth, R-N.C., said at the hearing of his Senate Banking subcommittee on financial institutions and regulatory relief.

“We shouldn’t make it easy to rid yourself of your debts. If you are employed and can pay some of what you owe, you should be required to,” Faircloth said.

The hearing was mainly an airing of views on the subject, since the subcommittee doesn’t have authority to draft legislation. That power in the Senate falls to the Judiciary Committee, where Sens. Charles Grassley, R-Iowa, and Richard Durbin, D-Ill., have proposed a measure that includes tough new fines for abuse by creditors who try to intimidate or harass consumers into giving up their legal protections.

In the House, one proposal seeks to prevent people who can afford to pay their debts from escaping them, but also would discourage lenders from making new loans to consumers who already are overburdened.

A competing bill would establish a “needs” test to determine how much debt relief people should receive and how much they are able to repay.