Bankruptcy: Last Week Tonight with John Oliver (HBO)

moving on our main story tonight concerns bankruptcy you probably know it from being the worst possible outcome on wheel of fortune aside from hugging pat sajak or winning a mitsubishi mirage or maybe you're familiar with it through ads for bankruptcy lawyers like this one once upon a time there was a fair maiden named mary mary lived a storybook life until her prince charming was smashed from his steed then her castle came under siege and the cries of assault were vexing her champion had been gravely injured and the pox had fallen upon her house i've helped thousands of clients like mary and i can probably help you get a fresh start wow there is a lot there from an unmarked van fully mean girlsing mary's husband to him surviving what appear to be surprisingly minor injuries to that lawyer claiming he's helped thousands of clients like mary meaning that in the chattanooga area there are somehow thousands of women who've watched their husband get stomped by a cargo van and then take what can only be described as a gatling gun of mail to the face if that is true they've got a way more lucrative lawsuit than a bankruptcy case what that ad is promising though is really attractive a fresh start from your debts and it's something a lot of people have turned to over the past decades the number of personal bankruptcies filed each year has ranged from about 800 thousand to one and a half million and many worry that once the current pandemic assistance stops more and more people will need the type of help that bankruptcy offers because very basically bankruptcy is a legal procedure by which those who are deeply weighted down by debts can get out from underneath them and then have a chance to start anew which is good although it does come with some consequences it will be on your credit report and there tends to be some social stigma attached as exemplified in this clip from shark tank jeff i understand your decision to go bankrupt cleans the slate but it carries a weight you'll never have a bank jeff ever to me you're radioactive there are a million people out there who are going to get the wrong message from what you're saying no they're getting the right message they should not go bankrupt well hold on because that is a terrible lesson and you kevin o'leary i hardly want to be calling someone's decisions radioactive given that you invested in companies with business models like put your face on a potato look like an idiot on a unicycle and toy guru the netflix for toys whose mascot always looked like it was searching for a place to take a and which interestingly filed for bankruptcy so i'm sorry kevin but to me that makes you radioactive i'm out but that broad brush stigmatization is common and completely misguided because bankruptcy is not solely caused by bad decisions it's often caused by bad luck unavoidable challenges like job loss divorce surprise medical bills or perhaps even you know a once in a century global pandemic and despite bankruptcy often being characterized as an easy out the way it's currently set up it's sometimes not an out at all as this couple learned before you're done and over with you're definitely looking to spend at least a thousand dollars to fi to claim bankruptcy um we don't have a thousand dollars so you can't afford we can't afford bankruptcy to go bankrupt yet we're fifty thousand dollars in debt so what do we do yeah a lot of people can't afford to go bankrupt a true sentence that fundamentally doesn't make sense like sonic drivings advertising cities whether a no sonic locations or the sequel to now you see me wasn't called now you don't or elon musk doesn't his cars i mean come on that is the face of a man who's at the very least measured the circumference of the charging point so given all of that tonight let's take a look at personal bankruptcy our modern bankruptcy code was enacted in 1978 interestingly around the same time that the credit card industry began to enjoy a period of steady deregulation which worked out very well for them because they marketed themselves aggressively and during this time consumer debt began to sharply rise and what the industry clearly wanted was people stuck in a lucrative cycle of minimum payments late fees and interest hikes what they didn't want spoiling that was people cutting the cycle short through bankruptcy so by the late 90s they were lobbying senators like chuck grassley hard to curb what they framed as bankruptcy abuse basically arguing the people who could afford to pay were using bankruptcy as an easy way to not pay bills and then pass the costs on to the rest of us and grassley seemed more than happy to repeat some of the industry's talking points there's not a single family in america low income or high income that is not paying part of the cost of bankruptcy 40 billion dollars cost to the economy every year 400 for a family of four wow the average family pays 400 a year because deadbeats abuse the system grassley dropped that shocking fact with the confidence of a man who would later tweet from his government account windsor heights dairy queen is good place for you know what the thing is though that 400 figure is total nonsense no one knows for certain where it came from and despite it turning out to be demonstrably false the credit card industry pushed it hard to create a narrative of widespread irresponsibility and abuse around bankruptcy but it's a little hard to take moral grandstanding from credit card companies who were all too happy to help people get into significant debt even if they had just declared bankruptcy barely out of bankruptcy court joan brunette opened her mailbox and there it was the chance for a shiny new credit card the first of many it looked like an easy three thousand dollars and i think i hung on to it for a day and then i thought oh no you're not going to be that crazy the banks are giving out credit with a reckless disregard for the consumer's ability to repay yeah that max weinberg impersonator is absolutely right and so by the way was joan who self-restraint i really do admire there imagine the expenditures that i could have avoided by simply saying no john you're not going to be that crazy ask yourself do you really need this item but years of lobbying by the credit card and banking industry ultimately resulted in a hugely significant 2005 bankruptcy reform bill which made it far more complicated to fall for bankruptcy than it had previously been which in turn made it far more costly which meant many people ended up in a situation where they couldn't afford to go bankrupt and to understand our current system a key thing to know is that there is not one main kind of personal bankruptcy there are actually two chapter 7 and chapter 13. chapter 7 is what you commonly think of as bankruptcy your debts are mostly wiped out and while you can hold on to a few essential assets below a certain threshold the rest can then be sold to pay off your creditors it takes a few months to complete but then you do get your chance at a fresh start chapter 13 however is different that is more of a reorganization of debt basically your finances get examined to work out how much you can afford to pay into a repayment plan for three to five years and if you make all the payments in that plan at the end of it your debts do get discharged and this does have its benefits you don't have to give up assets like a house or a car but and this is a huge but if you miss even one payment your case could be dismissed and the whole deal is off you're essentially all the way back to square one and the uncomfortable fact is this happens in most chapter 13 cases because only a third actually make it all the way to discharge and chapter 13 is also actually much more expensive to file because while attorneys charge on average about thirteen hundred dollars to file chapter seven for chapter 13 they generally charge about 3 800. so you might be thinking well if chapter 13 is more costly more difficult and less likely to get you a genuinely fresh start why would anyone choose it well for some it might be the right fit remember it gives you a chance to keep your house which you might need to live in and your car which you might need to work but for many many more chapter 13 despite costing three times as much in the long term can actually seem like the better financial option when you file because chapter seven generally requires you to pay lawyers up front whereas chapter 13 can be different as law firms can be eager to point out to you is debt constantly on your mind are you looking to get a fresh start financially then call the bankruptcy attorneys at wooten and woot we even offer a no money down chapter 13 plan okay first get the out of my void wooten i know i don't technically own the concept of sad white emptiness jared leto's got the market covered on that one but i will be damned if i let this adult who looks like he just made a wish to be big steal my whole vibe but the point here is if you are already in a bad spot with your finances which you probably are if you're considering bankruptcy no money up front might not just sound good it might be your only option the worry is that some lawyers guide their clients to the more expensive chapter 13 when they'd actually be far better served with chapter seven and if you know anything about america it will not surprise you to learn that when researchers ran an academic experiment they found attorneys were more likely to recommend chapter 13 to a hypothetical black couple caused by the way reggie and leticia than they were to a hypothetical white couple called todd and alison i'm putting aside the question of whether the research has plucked reggie and leticia from the big book of stereotypical but hopefully not offensively so black names the fact is the study's findings do help explain why nationally the odds of black debtors choosing chapter 13 instead of chapter 7 were more than twice as high as white debtors with a similar financial profile so even bankruptcy discriminates against black people which is coincidentally the cover story on this month's issue of yeah no magazine and the fact that people are often pushed into the form of bankruptcy with far less successful outcomes mean that they can end up having to fold bankruptcy again down the line and knowing that makes it a little hard to see financial experts like susie allman broadly frame repeated filing as a moral failing most people who claim bankruptcy once claim it twice so if you are claiming bankruptcy you have got to learn because if you get yourself into that situation again if you go out and you rack up all this credit card debt and all the stuff again and you have to claim bankruptcy again then i say shame on you wow susie is offering repeat bankruptcy filers the shame on you normally reserved for dogs who peed on the carpet and nosey pharmacists in magnolia who've asked julianne moore one too many questions i have sickness all around me and you asked me my life have you seen death in your bed in your house what's your decency and then i've asked questions what's wrong you suck my dick that's what's wrong and you you call me lady shame on you shame on you but a few things first experts say that orman's claim that most bankruptcy filers file twice is just wrong but much more importantly even those who do end up filing a second time often do so due to factors that have nothing to do with recklessness like for instance getting pushed into a chapter 13 bankruptcy that was not right for them and there is something else that can significantly limit the help that bankruptcy can provide because there are whole categories of non-dischargeable debts debts that even bankruptcy cannot get rid of you typically can't wipe out debt from criminal penalties taxes or child support through bankruptcy and there is another massive category as this woman learned thirty-one-year-old radmila sulimonova graduated with a masters from new york university in 2008 during the depths of the great recession jobless she quickly defaulted on her eighty thousand dollar student loan bill oh well i'll just file for bankruptcy like everyone else is doing hahaha and then you realize no the only way to get away from your student loan debt is to die yeah and to communicate just how bad student loan debt is as a generational dead weight on millennials i guarantee you anyone with student loans watching this right now heard 80 000 and thought yeah i don't know i've i've heard much worse because yeah she could have bought this entire three-bedroom two-bathroom house in indianapolis but who really needs a place to live when you have a framed eight and a half by eleven piece of paper with your name on it that can just like a house keep you safe from the rain and if all that weren't bad enough our current system adds insult to injury through mandatory credit counseling courses which can be exactly as patronizing as they sound even bankruptcy judges have called them inane and a procedural hurdle without value or consequence with one even noting a course referred participants to the local library for resources on bankruptcy and recommended they seek a job making higher wages and i'm sure they had never thought of doing that before it was very cleverly pointed out to them and if it seems that these courses may have limited value one that we found online even seemed to reluctantly acknowledge that fact your attorney may have gone over your particular situation with you in their office already perhaps they explained why credit counseling will not work for you many debtors therefore believe that this mandatory credit counseling exercise is pointless we hope instead you will take a more positive view of this mandatory course oh you hope so do you that's basically an admission that the whole thing's a waste of time although quick question here why is the attorney there cartoon me he's wearing my glasses he has my bangs he's negging an unwilling civilian while waving around a boring amount of paperwork the guy is more me than i am and while at best an objectively hunky cartoon lecturing you on your finances is annoying at worst it can be actively insulting because the assumption in these courses is that you are in this position due to reckless personal behavior but imagine how that argument feels if you like this woman went bankrupt after having to leave your job to take care of your son who died from cystic fibrosis in september we sat down to take the credit counseling course and it was sort of a slap in the face honestly and we have not yet finished that course we logged off and needed to walk away from it for a little while and we'll need to do it again after we actually go through the filing process and meet with the judge it's a requirement after you file as well so that you can i guess get an idea of how to not do the same thing again in the future so which is an incredibly hurtful idea that i'm not looking forward to no of course you're not because having a course suggests that there is a way not to have your child die again in the future is a insult and it is terrible that she not only had to go through that but then had to rehash it in the senate in an attempt to get that requirement changed which by the way it wasn't and the truth is so much of what is wrong with our current bankruptcy system stems from that 2005 law that i mentioned to you earlier expanding the non-dischargeability of student loan debt that was in there the mandatory credit counseling classes that was in there too the law also made bankruptcy harder to complete adding over a dozen ways that someone could make a technical error and be dismissed it was a huge win for the credit card companies and for all the assurances from grassley and others that it would target high-income people abusing the system without hurting those of lesser means after it passed bankruptcy filings dropped disproportionately in poorer neighborhoods with filings there decreasing 32 more than in rich ones showing that as always when things are designed to become harder for everyone for the rich they just become a bit more expensive and for the poor they become basically impossible so what can we do here well ideally the people responsible for that 2005 law would acknowledge that our system badly needs fixing and coincidentally one of the most prominent backers of that law is actually the president now joe biden is from delaware home to some of the biggest credit card companies and his support was crucial in getting the 2005 law passed and it is not like he wasn't warned that it could lead to trouble when it was being debated elizabeth warren then a harvard law professor studying bankruptcy testified about how medical debt ruins people's lives and how this bill could significantly hinder their one remaining chance to get out from underneath it and joe biden kept shifting focus back to the poor creditors who wouldn't get their money until we fix the broken health care finance system right those families have to turn somewhere and that means now they turn as a last-ditch effort to the bankruptcy and that means they turn to asking the people that they borrowed money from to pay for their health care costs right we're going to ask the gas company the drugstore the automobile dealer to pay for the broken system okay but that's not really how this works is it it's not that we're living in some small town in the 1920s racking up debts to the corner store for groceries the butcher shop for meat and the local pharmacy for cough drops laced with weapons grade cocaine no we're living in a world where medical debt is out of control and people have envelopes rammed through their door every day screaming that they're pre-approved for a credit card oh look this one has snoopy on it now the good news is in december elizabeth warren proposed the consumer bankruptcy reform act which would completely overhaul our bankruptcy system it would eliminate excessive paperwork needed for filing thereby lowering attorney costs it would make student loan debt dischargeable it would get rid of the requirement for a credit counseling course and it would combine chapter 7 and 13 into a new more flexible chapter 10. it's a combination that would be an improvement sort of like burger king's chicken fries a little bit chicken little bit fries all in a box that looks like i asked my kids to draw me from memory and while biden has broadly expressed support for warren's reforms the fact is her plan is unlikely to pass in its entirety because it would need 10 republicans in the senate to get on board because democrats like joe manchin and kirsten cinema are still in a death cult over the filibuster for some reason but the fact is something big needs to happen here because we badly need to get our broken bankruptcy system working again for people who desperately need a lifeline and meanwhile while we wait for congress to act the very least we can do is offer an alternative credit counseling course that isn't quite so insulting hello there i'm the cartoonist's steamiest wonk if you're watching this video chances are you've hit hard times maybe your husband was pancaked by an unmarked cargo van or maybe you lost your job due to the coronavirus and that fateful day in 2019 when one bat that other bat either way you're saddled with debt right now and you're looking for a fresh start thankfully you found bankruptcy less that is your debt is student loans in which case you should think about faking your own death because odds are you're as as this bat under current bankruptcy law you're required to complete this credit counseling course and the key thing i'm here to tell you is there are two main kinds of personal bankruptcy chapter 7 that's the thing you think offers bankruptcy where typically most of your debts can be discharged and chapter 13 which you might assume works similarly though anyone who's been through it knows that it doesn't and if all this seems needlessly confusing it's because it is the whole system is currently designed to be so discouraging that eventually you say it and give up are you okay so instead of watching a condescending series of videos about how to make a budget why don't we both make better use of this time and enjoy this video of a man feeding a pack of raccoons individual hot dogs yes yes yes look filing for bankruptcy will never be as enjoyable as a raccoon eating a hot dog but at the very least it should be that simple bye that's our show thanks so much for watching we're off next week back may 2nd good night

Channel: LastWeekTonight

Views: 4,116,489

Rating: 4.8908272 out of 5

Keywords:

Id: GzFG0Cdh8D8

Length: 21min 12sec (1272 seconds)

Published: Sun Apr 18 2021

Reddit Comments

[u/Spanky_McJiggles]

I know it wasn't a part of this segment, but his joke "I haven't gone for a jog in the middle of the workday since 9/11" was my favorite part of this episode

[u/SyntheticOne]

Respect.

Predatory credit system also has predatory politicians in their pockets defending the lies. Predatory judicial systems too? Makes me wonder.

[u/earhere]

That clip of the guy feeding those raccoons hotdogs was actually scary.

[u/happyfestivusgeorgie]

Does he talk about the fact that you cant just say the word Bankruptcy and expect anything to happen?

[u/infinight888]

Wonder how many Trumpsters are going to immediately downvote without watching, and miss John completely eviscerate Joe Biden.

[u/Infinite_Plankton]

Anybody got a mirror?

[u/PPQue6]

I hope they find that giant rabbit!!!!!!!

[u/VecinosConAzucar]

Liz Warren's transformation has been so depressing. That clip Oliver used is one of the reasons she even got into politics. Fast forward to 2020 and she's kissing Biden's ass after dropping out of the primary and getting nothing in return.

[u/unbenned]

Mirror https://streamable.com/nha0g9

ETA when this comment is 30 mins old