Last week, by an overwhelming vote of 83 to 14, the U.S. Senate approved long-overdue reforms of the nation's bankruptcy laws. That should come as welcome news for American consumers. Although most Americans carefully manage their finances, pay their bills, and never face the prospect of bankruptcy, they are the ones who ultimately bear the cost when others seek bankruptcy protection.
Responsible consumers pay higher interest rates and higher prices on goods and services as a result.
That can be a real burden. A single mother, who is already struggling to pay her own family's bills, shouldn't be forced to pay more merely because someone who can repay his or her debts prefers to escape them in bankruptcy. Young families and seniors on fixed incomes shouldn't have to pay more so that someone can walk away from his or her debts as a matter of convenience or financial planning. That is why we maintain access to bankruptcy relief for those who truly need it. However, a line needs to be drawn when people, particularly those with above-average incomes and the ability to repay a portion of their debts, nevertheless seek to have those debts erased in bankruptcy.