In the latest news, Utah again leads the nation in bankruptcies per capita, with nearly double tha national average.
Leading causes across the nation included:
- ease of obtaining personal credit and credit cards
- loss of a job
- financial mismanagement
- medical problems
- divorce
Utah’s leading reasons included, in addition to the above:
- larger family size
- higher charitable contributions
- lower-than-average per-capita income levels
Obviously, the problem isn’t going away. What do you think can (or should) be done to stem the tide of bankruptcy in the US? I can’t help but think that our rising bankruptcy rate spells bad news for our national welfare as a whole. Yet the current congressional plan to simply ban bankruptcy would simply condemn those who would have gone bankrupt and had a chance to start over to a lifetime of delinquency and grinding poverty.
The answer is simple…
Enact laws that encourage personal responsibility.
In the article that you linked to, some bozo named Kevin Anderson tried to blame credit agencies for the high bankruptcy link. Uh, Mr. Anderson, nobody makes you apply for credit. It is your responsibility to manage your own finances – not the credit agency’s or the government’s or anybody elses.
This lack of personal responsibility is what drives bankruptcies (as well as nearly all other social ills).
My recommendation to help the problem would be to make filing for bankruptcy something that required proof of damages incurred that were beyond your control. Those poor folks who lost their jobs or had unforeseen medical expenses would still have a recourse – but those who dug themselves a hole because they overextended themselves on material goods and credit would have to figure out some other way to absolve themselves of their debts. If that includes years of delinquency and grinding poverty to bail themseleves back out, then I’m all for it. Maybe the culprits will learn from their errors when they have to (literally) pay for them.
Actions should have consequences and the current ease of avoiding consequences of poor financial management by simply filing for bankruptcy is what is fueling the problem.
My own (again, somewhat cynical) view is that there is much about Utah Culture that inclines its citizens to substitute personal responsibility for obedience to authority coupled with a denial of consequence due to priviliged position. Not to put too fine a point on it, but if you teach a large body of a population that it is more important to pay 10% of their income to a church institution and have large families than it is to plan out their financial situation intelligently, you are bound to wind up with a sizeable number of them over-extended and going bankrupt.
Charitable giving and large families are fine and dandy. Encouraging people to do these things without paying any heed to the consequences is not.