• Credit Slips from Getting Sick?

    Posted by

    Melissa Jacoby

    Everyone is talking about household medical debt this week. American Enterprise Institute Research Fellow Aparna Mathur has just issued a report finding that “nearly 27% of bankruptcy filings are a consequence of primarily medical debt” based on an analysis of data from the Panel Study of Income Dynamics. Meanwhile, over at the Center for American Progress, we can find the results of a poll in which 44% reported being worried about falling deeply into debt because of medical expenses – more than were worried about being hurt or killed in a terrorist attack or losing a home in a natural disaster.


    Medical debt deserves a prominent place on the public’s radar screen and on the research agenda of scholars from a variety of disciplines.  Still, a slight reframing of the problem is in order.  Incurrence of catastrophic medical expenses is a serious policy issue but a rather rare event.  Flowing far more commonly from medical problems is the incurrence of non-catastrophic (but still substantial) out-of-pocket health and incidental expenses coupled with income loss, various opportunity costs, and the price of credit used to smooth consumption when household savings are not up to the task.  It is this more subtle and complex combination that is heightening financial risk for many American households.

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  • Missing GAO study?

    Posted by

    Katie Porter

    The much-maligned Bankruptcy Abuse Prevention and Consumer Prevention Act (BAPCPA) may have a bright side for a certain subset of consumers–those who want better bankruptcy statistics, including the media, policy wonks, and academics. Much of the recent bankruptcy reform debate was a battle of numbers as illustrated by the debate about the misnamed and miscalculated $400 "bankruptcy tax." In a forthcoming University of Missouri symposium piece entitled "The Bright Side of BAPCPA," I take a look at the potential of the new law to shape the world of bankruptcy data collection and dissemination.

    As part of my research, I learned that the GAO has missed a statutory deadline to produce a research report. Under section 230 of BAPCPA, the GAO was to produce a study on requiring trustees to report debtors to the Office of Child Support Enforcement. The report was due 270 days after BAPCPA’s enactment, yet GAO officials confirmed that the study has not even begun. Has bankruptcy slipped to the bottom of the GAO’s priority list now that Congress has taken it off the top of its agenda?

    Apparently the GAO has made some progress on the reaffirmation study required by BAPCPA. Perhaps the best news in this regard is that they have interviewed Professors Michaela White and Marianne Culhane, authors of the leading academic study on reaffirmation. Hopefully, other government agencies doing post-BAPCPA research will seek collaborations with academics and other researchers. For our part as consumers of bankruptcy data, we should let the GAO and other agencies know that we care about the required reports and expect them to be timely and carefully executed.

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  • Security Freezes

    Posted by

    Bob Lawless

    In this security-conscious era, a "security freeze" strikes me as a great name for the newest treat at your local ice cream store. As it turns out, a security freeze is something a consumer can impose on their credit report and will stop most
    attempts to access a credit report for purposes of extending new credit. According to Consumers Union, twenty-two states now have laws that allow all consumers to put a security freeze on their credit report before identity theft strikes. In a few states, only victims of identity theft can impose a security freeze.

    To be sure, a security freeze is not a good solution for everyone. It can be a powerful tool to prevent identity thieves from entering into transactions and stop problems before they occur. But just as a credit freeze stops identity thieves, it also can stop consumers. For a consumer with a security freeze in place, even a transaction as simple as buying a cell phone might be delayed for several days while the consumer directs the credit reporting agency to temporarily lift the freeze. There is also the hassle and expense. In many states, a request for a security freeze has to be done through certified mail. It generally costs $10 per credit reporting agency to start a security freeze and another $10 each time one is temporarily lifted. Consumers should think long and hard before they impose a security freeze on their credit reports, consider whether the benefits outweigh the costs and hassle given their individual circumstances.

    The House of Representatives has on
    its calendar another one of those perversely titled bills, the Financial Data Protection Act of 2006 (H.R. 3997), that would preempt all state security freeze laws and as well as some other
    state laws intended to prevent and protect against identity theft. The federal
    law would allow only victims of identity theft to initiate a security freeze,
    rolling back the choice twenty-two states have given to their citizens. Groups such as Consumers
    Union, the Consumer Federation of America, the AARP, and the National Consumer Law Center have spoken out against the House bill, saying “Consumers today would be worse
    off under this bill than if nothing passed.”

    If the bill emerges from the House,
    its prospects in the Senate are unclear. The upcoming midterm elections may
    deter any congressional action on a law opposed by so many consumer groups. The
    bill does have strong support among financial interests so it could find legs
    in a lame-duck congressional session or in a new Congress next spring. It wouldn’t be the first time that Congress has limited consumer rights under the guise of a bill that purports to protect consumers in its title. If truth-in-advertising laws applied to Congress, this bill would be entitled, "The Limit Consumer Choice in Credit Reporting Act of 2006."

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  • Yet Another Blog

    Posted by

    Bob Lawless

    Welcome to Credit Slips, a new blog on all things about credit and
    bankruptcy. In this space, the seven of us will be doing what we like to do when
    we get together–discussing and debating what does happen and what should happen when consumers
    and businesses borrow money. Because most every consumer or business
    borrows money, we hope to have a lot to say that will interest a lot of people.

    We are seven academics who have come to know each other over the years and are
    now in the middle of a large research project known as Consumer Bankruptcy Project IV. The
    authors of the blog will be:

    • Melissa Jacoby, law professor, University of North Carolina
    • Bob Lawless, law professor, University of Illinois
    • Angie Litwin, Climenko Fellow, Harvard Law School
    • Katie Porter, law professor, University of Iowa
    • John Pottow, law professor, University of Michigan
    • Debb Thorne, sociology professor, Ohio University
    • Elizabeth Warren, law professor, Harvard Law School

    More information about each of us appears in the links on the left-hand side.

    We intend to make the site of general interest to anyone who is concerned
    about debt and credit issues, and we’ll come at these issues from different
    perspectives. Among the seven of us, we have areas of special interest on debt
    such as how it especially affects families, entrepreneurs, the elderly, and
    persons in rural area. Basically, we’ll be posting on whatever we encounter in
    our research and teaching that is new, different, or important. We’ll try to
    keep the discussion lively and the topics interesting.

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  • Policies

    Posted by

    Bob Lawless

    1. We do not provide legal advice, and nothing on this site should be construed as legal advice. We are not all even lawyers. Those of us who are lawyers can get in trouble for giving advice outside the states where we are licensed. Being in debt can be very stressful, and we understand the desire to reach out for help. Please do not contact us for advice because we cannot help you.

    2. There are four "regular" and ten "occasional" bloggers. Everyone is only responsible for what they post. We often disagree among ourselves. When we are together, we often cannot even agree on where to go for dinner. Just because one of us posted something on this web site does not mean the others agree. All of that is also true for our guest bloggers–they are no more responsible for our views than we are for their views (although we will let our guest bloggers pick where to go for dinner).

    3. We will not substantively edit our posts except for grammatical, stylistic, or spelling errrors (and sometimes not even then). If we later add something to a post, we will make it clear by prefacing the addition with the word "Update" or something similar.

    4. Comments are open. Individual blog authors may decide not to allow comments for all or some of their posts. Readers are welcome to post their comments, and we welcome open debate. We will remove comments that we find inappropriate such as comments that are profane or vulgar, commercial marketing, ad hominem attacks, or nothing but inflammatory rhetoric. We get very few such comments.

    5. We encourage readers to share our blog with others and to use Credit Slips postings in news pieces or academic writing. If possible, we would appreciate your linking to the blog when you reproduce our content and acknowledging the name of the individual author of the posting.

    6. We do not accept unsolicited content.

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Contributors

Pamela Foohey

Anna Gelpern

Melissa Jacoby

Jason Kilborn

Bob Lawless

Adam Levitin

Christopher Odinet

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