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Personal bankruptcy grows
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January 15, 1998: 9:28 a.m. ET
More Americans are going broke despite high economic times
From Correspondent John Metaxas
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NEW YORK (CNNfn) - Despite a booming stock market and low unemployment, more Americans than ever before, a total of 1.3 million, filed for personal bankruptcy in 1997.
In fact, personal bankruptcies have nearly tripled over the last decade.
At the root of the increase are the explosion of credit cards, the boom in casino gambling, personal crises like divorce and medical emergencies, and a legal system eager to grease the wheels.
Personal bankruptcy can provide a fresh start for people who have accumulated so much debt that they can't pay it off.
Debtors have a choice. They can file for Chapter 7, which eliminates most debt, or for Chapter 13, which lets them stretch out payment while getting protection from creditors.
Increasing numbers of affluent Americans and even some celebrities are filing.
"Bankruptcy does not have the same impact today that it did a generation ago, and that may well lead to a diminution of the kind of stigma that formerly attached itself to a personal bankruptcy filing," said Samuel Gerdano, executive director of the American Bankruptcy Institute.
"When I found out, watching the news and in the newspaper, that more and more people are doing it, and it's not just the middle class, upper class, too, rich people, everybody's doing it. I said 'Why not me?' I'm just one more of them," said one debtor.
Critics say bankruptcy laws are being abused. Congress is considering reform, and two bills are pending.
"The main goal of bankruptcy reform in my judgment is to discourage people from discharging all of their debt when they can afford to pay all of it back," said Rep. Bill McCollum of Florida.
Reform would force society to choose between the rights of creditors and the needs of debtors.
"While there are people for whom this is an easy ride, for the vast majority, bankruptcy is not an easy ride," said Karen Gross of the New York Law School.
But in today's easy credit times, more and more Americans seem willing to admit financial failure and to pay the consequences for a chance to wipe the slate clean.
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