Three to five years is a long time for bankrupts to scrimp and save, especially when there's so many high-interest lenders willing to throw more money their way at tremendous costs. Not surprisingly, debtors often drop out of the Chapter 13 program. Emerson suspects 10 to 20 percent of bankrupts end up filing bankruptcy more than once. Overall, a large percentage of Chapter 13s refile because they are not being taught money-management skills, nor are they given serious incentives to pay back their debts, according to Visa's research. Bankruptcy is not rehabilitative.
Nothing is learned from it.
Charles Dempsey, program director for the Memphis Consumer Credit Association, says one cause locally could be that bankruptcy supports too many people's livelihoods. Several local businesses also have profited, including National Bank of Commerce, which has become so efficient at handling bankruptcy-court transactions that it now provides the same services to bankruptcy trustees' offices in 27 states, and Midland Risk Insurance, which provides mandatory insurance at steep rates to all bankrupt uninsured motorists. The company has extended the program to 18 other trustees' offices in eight states. Bankruptcy in Memphis has become an industry, Dempsey says. A real quiet one.