John Oliver explains personal bankruptcy, how lobbyists and credit card lawyers make it worse

Bankruptcy, particularly as described by bankruptcy attorneys, promises “a fresh start in your debts,” John Oliver said on Sunday. Last week tonight. Between 800,000 and 1.5 million Americans file for bankruptcy each year, “and many fear that once current pandemic assistance ends, more people will need the kind of help” that proposes bankruptcy. The process gives people a chance to get out of a mountain of debt, but it affects your credit score, and it carries a “completely wrong” social stigma, he said.

“Bankruptcy isn’t just caused by bad decisions, it’s often caused by bad luck – inevitable challenges like job loss, divorce, surprise medical bills, or maybe even, you know, a unique global pandemic, ”said Oliver. . But absurdly, “a lot of people can’t afford to go bankrupt,” literally.

“Our modern bankruptcy code was enacted in 1978 – interestingly, around the same time the credit card industry began to benefit from a period of constant deregulation,” Oliver said. It “worked very well for them, as they marketed themselves aggressively, and during that time consumer debt started to rise sharply. And what the industry clearly wanted was people stuck in a lucrative cycle of minimum payments, late fees and rising interest. What they didn’t want to spoil was for people to shorten the bankruptcy cycle. “

The credit card industry has aggressively lobbied Congress, and a 2005 law made it more difficult and costly to file for personal bankruptcy, Oliver said. He explained the two types of personal bankruptcy, Chapter 7 and Chapter 13, and noted that many lawyers refer their clients to the more expensive option, Chapter 13, especially if their clients are black. “Even bankruptcy discriminates against blacks,” sighed Oliver. He explained why people might have to file for bankruptcy twice – not, as Suze Orman suggests, “recklessness” or “moral failure” – and blamed “much of what’s wrong with our current bankruptcy system “on the 2005 overhaul.

If you’ve been paying attention to the 2020 Democratic primaries, you already know that President Biden was a big supporter of the 2005 law and clashed with Senator Elizabeth Warren (D-Mass.) On it – and if you pay no attention to it. Oliver offered a recap. Warren now has a recast bill that Biden broadly supports, but it is unlikely to pass if 10 Republicans are to sign to thwart a filibuster, he said. Oliver concluded with a lively NSFW summary of his argument that also pillories mandatory credit counseling. Take a look below.

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