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Published: Tuesday, 1/6/2004

The easy way out

Once there was a time when a handshake cinched a deal or a promise to pay. No one would besmirch personal reputation by reneging on either. Unfortunately, it s a concept that is foreign to many, including northwest Ohioans who are declaring bankruptcy in record numbers.

In 2003 more than 10,000 people and businesses in the 21 counties of northwest Ohio filed for bankruptcy, more than double the number of four years ago.

Many people still in the thrall of rising expectations and an uncertain economy have not managed their personal affairs wisely or with restraint.

Most didn t ask for time and a repayment plan to meet IOUs. Of the personal bankruptcies, the bulk of cases filed, most wanted out from under debt obligations, personal reputation be damned. Such eco-social anarchy erodes the social glue of trust and fairness.

Sure, there can be extenuating circumstances. Jobs ending, factories moving, catastrophic accident, and illness can all wreak havoc on pocketbooks and leave people hopeless and helpless. But it s hard to imagine that all 10,381 filings here last year were of such tragic stuff.

Worse yet, we probably haven t peaked. Experts expect a 20 percent increase in 2004. These represent a lot of broken promises, which the IOUs of debt are, and a lot of sticking someone else with financial loss.

Bankruptcy has become not a respite for those against whom fate has played a passel of dirty tricks, but a refuge for the irresponsible, seeking freedom to spend, spend, spend. But let s not let the financial institutions that purvey easy credit off the hook either. They encourage spending addictions and whine only when they ve made a mistake.

Clearly there needs to be reform. A bill last year that would have required a longer period between one bankruptcy and the next failed on several counts.

The American Bar Association denounced it for stringent, unworkable provisions vis- -vis lawyers. Consumer activists claimed it was kinder to corporations than to individuals.

Some in Congress fretted that it didn t equalize the financial interest in a home exempt from bankruptcy. So in one state, a bankrupt filer could retain, say, a $40,000 interest in his or her home while other states free homesteads worth millions from the assets that can be used to satisfy creditors.

Despite all this, what brought the legislation down was a provision to bar abortion-clinic protesters from using bankruptcy laws to welsh on court fees and fines. This should not have been an ideological abortion issue. Everyone who protests illegally for any reason and faces fines should be barred from the practice.

We noted last March a program designed by the New York-based Coalition for Consumer Bankruptcy Debtor Education. It s a three-hour class outlining, among other things, money management, budgeting, predatory lenders, self-discipline, and insight into the cost of credit. It should be a must for anyone filing for personal bankruptcy. And legislators should pursue sensible reforms.



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