The Two-Income Trap (40 page)

97
American Bankruptcy Institute,
Statements Made Upon the Introduction of the “Bankruptcy Reform Act of 1999”
(February 24, 1999). Available at
http://www.abiworld.org/legis/bills/statements2-24-99.html
[3/3/2003].

98
For a detailed discussion of this aspect of the credit industry’s campaign to justify a change in the bankruptcy laws, including dissemination of the claim that bankruptcy costs average families, see Elizabeth Warren, “The Market for Data: The Changing Role of the Social Sciences in Changing the Law” (Fairchild Lecture),
Wisconsin Law Review
2002 (2002): 1-43. Note that the figure was originally quoted as $400 per family, but that later commentators inflated the figure, so that $550 is now the figure most commonly cited. The new number has no more factual basis than the original.

99
The creditor coalition hired Ernst & Young (E&Y) to produce some numbers for their public relations campaign. E&Y initially estimated that 15 percent of the families in Chapter 7 might have the ability to pay something under the proposed legislation. Because the debtors in Chapter 13 were already paying, they were left out of the calculation. Nonetheless, the proposed bankruptcy bill would impose several new burdens on Chapter 13 filers as well. Under current legislation, for example, families are permitted to focus their available income on making up home mortgage arrearages; the proposed legislation would require that credit card issuers and car lenders receive more repayments or the family would be denied access to Chapter 13 protection. A year later, E&Y lowered their estimate of potential payers to 10 percent of Chapter 7 filers. (For a review of these two studies, see U.S. Congressional Budget Office,
Personal Bankruptcy: A Literature Review,
CBO Papers
[September 2000]. Available at
http://www.cbo.gov/showdoc.cfrm?index=2421&sequence=0
[3/3/2003].) In 2002, 1,036,410 families filed for Chapter 7 bankruptcy. Multiplying that figure by the E&Y claim that 10 percent of them could pay something yields a total of about 103,600 families. Independent academics estimate that only 3.6 percent of those in Chapter 7 might be able to repay more under the new legislation. The lower estimate, of course, just makes the $550 per family estimate more absurd, requiring those Chapter 7 filers to come up with over $1.5 million apiece. Marianne B. Culhane and Michaela M. White, “Taking the New Consumer Bankruptcy Model for a Test Drive: Means Testing Real Chapter 7 Debtors,”
American Bankruptcy Institute Law Review
7 (Spring 1999): 27, 59.

100
Senator Hillary Rodham Clinton, Bankruptcy Floor Statement, July 12, 2001.

101
Phil Shenon, “Abortion Issue Holds up Bill on Bankruptcy,”
New York Times,
April 30, 2002. Shenon writes: “The provision would bar abortion opponents from declaring bankruptcy to avoid paying court-imposed fines or damages that result from violent protests at abortion clinics. In recent years, a number of prominent abortion foes have used the bankruptcy laws for that purpose, among them Randall Terry, the founder of Operation Rescue. In declaring bankruptcy in 1998, Mr. Terry said he wanted to avoid paying debts, which then totaled more than $1 million, ‘to those who would use my money to promote the killing of the unborn.’”

102
Philip Shenon, “Lenders’ Ads Urge Senator to Drop Item from Debt Bill,”
New York Times,
May 21, 2002.

103
Bolton, “Bankruptcy Bill Is Conflict for Daschle.”

104
The bankruptcy filing rates in 2001 were 39.9 per 1,000 for black homeowners, 14.4 for Hispanic homeowners, and 5.8 for white homeowners. National data on the number of homeowners by racial group from U.S. Bureau of the Census, American Housing Survey for the United States: 2001, Annual Survey (2001). Available at
http://www.census.gov/hhes/www/housing/ahs/01adtchrt/tab3-1.html
[3/22/03].

105
HUD, Federal Housing Authority Single Family Mortgage Insurance Foreclosures, Cumulative by Number and Percent, 1982-2002, unpublished data.

106
In Chicago, 41 percent of the city’s subprime refinancing occurs in black neighborhoods, although only 10 percent of the overall refinancing takes place in these same neighborhoods. HUD,
Unequal Burden.
An Illinois study found that there are 37 percent more payday loans issued in minority neighborhoods than in white neighborhoods. Woodstock Institute,
Unregulated Payday Lending Pulls Vulnerable Consumers into Spiraling Debt
, Reinvestment Alert Number 14 (Chicago: Woodstock Institute, March 2000). Available at
www.woodstockinst.org/alert.pdf
[2/2/2003].

107
In 1996, a Texaco employee revealed secret tape recordings he had made of Texaco executives disparaging African-American employees and discussing the shredding of documents pertaining to a discrimination case. After this release, civil
rights leaders called for a boycott against the company, a number of customers cut up their Texaco credit cards, and some investors sold their Texaco stock. Within two weeks of the disclosure, Texaco agreed to pay $140 million to settle the case. The outrage over these tapes prompted the company to adopt new policies to promote equality and erase discrimination within its organization. See, e.g., Adam Bryant, “How Much Has Texaco Changed?”
New York Times,
November 2, 1997; Tim Whitmire, “Tapes Don’t Stick in Court: Ex-Texaco Executives Walk,”
Chicago Sun-Times,
May 13, 1998.

108
See chapter 1, note 10, and chapter 5, notes 17 and 21, for more information on these calculations.

109
Letter from American Association of University Women, Children NOW, Children’s Defense Fund, Center for Law and Social Policy (CLASP), Feminist Majority Foundation, National Association of Commissions for Women (NACW), National Center for Youth Law, National Organization for Women, National Partnership for Women and Families, National Women’s Conference, National Women’s Law Center, National Youth Law Center, NOW Legal Defense and Education Fund, OWL, The Women Activist Fund, Inc., Wider Opportunities for Women, Women Employed, Women Work!, Women’s Law Center of Maryland, Inc., YWCA of the USA, March 2, 2000 (on file with the authors). The leading organizations are the National Women’s Law Center, the NOW Legal Defense and Education Fund, and the National Partnership for Women and Families.

110
There was a glossy photograph of Senator Biden in the NOW Legal Defense annual report, which is sent to thousands of politically active women. No other politician rated a mention.

111
Pamela Barnett, “Sources Say Addition of Biden Increased Its Size,”
Congressional Daily,
June 23, 2001; Pamela Barnett, “Large Bankruptcy Conference Dismays Bill Supporters,”
Congressional Daily,
July 23, 2001.

112
During the 2002-2003 academic year, 714,000 women were awarded bachelor’s degrees. National Center for Education Statistics,
Digest of Education Statistics
, 2001, 37th ed. Compilation of Statistical Information, by Valerie White Plisko (Washington, DC, 2001), Table 247, Earned Degrees Conferred by Degree-Granting Institutions, by Level of Degree and Sex of Student, 1869-70 to 2010-11. Available at
http://nces.ed.gov/pubs2002/digest2001/tables/dt247.asp
[2/6/2003]. In an average month in 1999, 1.8 million children received day care subsidized by the federal Child Care and Development Block Grant/Child Care and Development Fund, the primary federal program for subsidized day care. U.S. Department of Health and Human Services, Administration for Children and Families,
Child Care and Development Block Grant/Child Care and Development Fund,
news release December 6, 2000. Table, Children Served in Fiscal Year 1999 (average monthly). Many of these children will be in the same program for several years. By comparison, in a two-year period, approximately 3.1 million children will go through their
parents’ bankruptcies. Each year, approximately 1.5 million women in the United States are raped and/or physically assaulted by an intimate partner; about 375,000 of these women seek police protection. Patricia Tjaden and Nancy Thoennes,
Extent, Nature, and Consequences of Intimate Partner Violence: Findings from the National Violence Against Women Survey
(Washington, DC: U.S. Department of Justice, National Institute of Justice, July 2000). Available at http://ncjrs.org/txtfiles1/nij/ 181867.txt [2/19/2003]. Callie Marie Rennison,
Rape and Sexual Assault: Reporting to Police and Medical Attention, 1992-2000, Selected Findings
(Washington, DC: U.S. Department of Justice, Bureau of Justice Statistics, August 2002). Available at
http://www.ojp.usdoj.gov/bjs/abstract/rsarp00.htm
[2/19/2003].

113
Open letter to Congress (February 28, 2001). Signers include American Friends Service Committee, McAuley Institute, MidAmerica Leadership Foundation, Unitarian Universalist Association of Congregations, Unitarian Universalist Service Committee, Washington Ethical Action Office/American Ethical Union, Religious Action Center of Reform Judaism, and NETWORK, A National Catholic Social Justice Lobby.

1
See calculation in chapter 4, notes 33-36.

2
Ernst & Young LLP, et al.
Ernst & Young’s Financial Planning for Women: A Woman’s Guide to Money for All of Life’s Major Events
(New York: John Wiley & Sons, 1999), p. 15.

3
Consumer Reports,
“What Price Insurance?” July 1999. Available at
http://www.consumerreports.org
[3/22/03]. As we noted in chapter 6, a creditor has a right to collect against the estate, but surviving family members have no obligation to pay.

4
“Credit Protection,”
CardTrakOnline,
September 20, 2002. Available at
http://www.cardweb.com/cardtrak/news/2002/september/30a.html
[3/22/03].

5
A thoughtful overview with a lot of practical advice is James P. Caher and John M. Caher,
Personal Bankruptcy for Dummies
(New York: Wiley, 2003).

6
See discussion in chapter 4.

7
Court records showed reaffirmation for 24.5 percent of the families in Chapter 7. Families who have filed for Chapter 13, which account for 30 percent of all bankruptcy filings, have already committed their entire disposable incomes to debt repayment, making reaffirmation irrelevant for them.

8
See discussion of the economics of repossession in chapter 6.

9
For example, a California debtor was offered $251 in new credit if she would reaffirm a debt for $250.93. If she used that new $251 credit in full, the court notes that she would be paying more than 100 percent interest for the new credit. If she used less, say $25 of the credit, she would be paying an effective interest rate in excess of 1,000 percent. Nonetheless, the debtor agreed to the deal. In re Kamps, 217
B.R. 836, 851 (Bankr. C.D. C.A. 1998). Similar examples of debtors signing such one-sided deals abound throughout the bankruptcy system.

10
Among respondents, 84.3 percent said they had received preapproved credit cards and other debt solicitations within six months of their bankruptcy filings. The median number of solicitations was thirty.

11
The filing rate for not-married women with minor children was 21.3 per 1,000; the filing rate for single women without children was 7.2 per 1,000, or 66 percent lower.

12
E. R. Kingson and R. O’Grady-LeShane, “The Effects of Caregiving on Women’s Social Security Benefits,”
Gerontologist
33 (1993): 230-239.

13
Phillip J. Longman and Amy Graham, “The Cost of Children,”
U.S. News & World Report,
March 30, 1998, p. 58.

14
See, for example, Ben Wattenberg,
The Birth Dearth: What Happens When People in Free Countries Don’t Have Enough Babies?
(New York: Pharos Books, 1988).

15
Stephanie Mencimer, “The Baby Boycott,”
Washington Monthly,
June 2001, p. 14.

16
Elinor Burkett,
The Baby Boon: How Family-Friendly America Cheats the Childless
(New York: Free Press, 2000), p. 197.

17
In 2001, Little League had an estimated 1.1 million new members. Private correspondence, Director of Media Relations and Communications, March 5, 2003. Approximately 34 million households own dogs. Of those, 20 percent, or 6.8 million, adopted the dog(s) from the humane society. The average family’s dog is five to six years old, with a life expectancy of more than ten years, suggesting that approximately 680,000 families adopt a dog from the humane society every year, including both families with and without children. According to the American Association of Orthodontics, approximately 1.6 million children and teenagers begin orthodontic treatment each year. Communication with American Association of Orthodontics, March 4, 2003.

18
Based on a linear regression of personal bankruptcies in America, 1980-2002, with an R-squared value of 0.937. The calculation assumes that the average number of children listed on their parents’ bankruptcy filing as dependent stays constant throughout this period.

19
Approximately 1 million children go through their parents’ divorce each year. “U.S. Divorce Statistics,”
Divorce
Magazine.com
(2000). Available at
http://www.divorcemag.com/statistics/statsUS.shtml
[4/1/03].

20
Katherine S. Newman,
Falling from Grace: The Experience of Downward Mobility in the American Middle Class
(New York: Free Press, 1988), p. 97.

21
Susan E. Mayer,
What Money Can’t Buy: Family Income and Children’s Life Chances
(Cambridge, MA: Harvard University Press, 1997), pp. 76-77. Five- to seven-year-olds whose parents experienced a drop in income of 35 percent or more
between two adjacent years were more likely to experience lower test scores and behavior problems in the classroom. Mayer controlled for other factors, such as parents’ marital status, race, and parents’ age at the birth of the child. Les B. Whitbeck, Ronald L. Simons, Rand D. Conger, Frederick O. Lorenz, Shirley Huck, and Glenn H. Elder Jr., “Family Economic Hardship, Parental Support, and Adolescent Self-Esteem,”
Social Psychology Quarterly
54 (December 1991): 353-363. The authors found that adolescents from families in financial distress are more likely to experience low self-esteem. Diana S. Clark-Lempers, Jacques D. Lempers, and Anton J. Netusil, “Family Financial Stress, Parental Support, and Young Adolescents’ Academic Achievement and Depressive Symptoms,”
Journal of Early Adolescence
10 (February 1990): 21-36. The study reported that adolescents from families in financial distress are more likely to experience greater strain in their relationships with their parents.