News Coverage Mischaracterizes NACBA Findings
I listened to the National Association of Consumer Bankruptcy Attorneys' press conference this afternoon. I wish Michael Martinez had, too. Martinez covered the release of NACBA's report on the impact of the October 17, 2005 bankruptcy reform for the Associated Press, which means that his version of NACBA's assessment has appeared-and will presumably continue to appear-in news outlets across the country. Thus, a public already all-too confused about the motivations for and impact of the 2005 bankruptcy reforms will be greeted with this opening assessment:
Last year's overhaul of the nation's bankruptcy code has done little to prevent people from skipping out on debts while burdening others who seek bankruptcy protections for legitimate reasons, according to a survey commissioned by a trade group of bankruptcy attorneys.
Technically, of course, Martinez's opening line is true-NACBA's report, like all of the speakers at the press conference, clearly states that the 2005 reforms have done little to prevent people from skipping out on debts. Unfortunately, Martinez fails to mention that the reason the reforms haven't accomplished that purpose isn't that irresponsible debtors are still slipping through the cracks in large numbers, but because they never were.
In fact, the AP story goes on to say that the credit counseling requirement "did little to weed out deadbeats trying to use bankruptcy to avoid debts." Again, that much is true-because the statement of Brad Botes, Executive Director of NACBA and the NACBA report make the consistent point so clearly conveyed in just one line in the report's title: Bankruptcy Reform's Impact: Where Are All the Deadbeats? The new law isn't weeding them out because it can't find them. It can't find them because they're not the bulk-or even a significant minority-of the people who seek bankruptcy protection.
Of course, that doesn't come as a surprise to anyone who practices bankruptcy law. We already knew that the vast majority-79%, according to the NACBA study-of people filing bankruptcy found themselves in dire straits due to circumstances entirely beyond their control like catastrophic illness, death of a spouse, or job loss.
Bankruptcy reform, as the NACBA report so clearly demonstrates, creates additional hurdles for people already in desperate circumstances-people Botes describes as "already flat on their back due to financial crises over which they have no control." The Associated Press spin on the story creates two more hurdles when it misleads the public into believing that deadbeats are still spinning the process instead of acknowledging that they never were, and when it fails to correct the mythology that has many honest debtors believing that bankruptcy protection is no longer available to them.
