As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America
By Teresa A. Sullivan, Elizabeth Warren and Jay Lawrence Westbrook 
1999/01 - Beard Books 
1893122158 - Paperback - Reprint -  384 pp.

A major contribution to the study of bankruptcy and to our understanding of debtors and creditors who end up in bankruptcy court.

Publisher Comments

Category: Bankruptcy & Restructuring

This title is part of the Bankruptcy Primer list.

Of Interest:

Bankruptcy Crimes: Third Edition

Bankruptcy in United States History

Bankruptcy: A Feast for Lawyers

Debtors and Creditors in America: Insolvency, Imprisonment for Debt, and Bankruptcy, 1607-1900

Ten Cents on the Dollar: Or the Bankruptcy Game

The PRC Enterprise Bankruptcy Law: The People's Work in Progress

You Can Go Bankrupt Without Going Broke: An Essential Guide to Personal Bankruptcy

With the sharp increase in bankruptcies over the past decade and an increasingly wide cross-section of occupational distribution represented, the question treated by this study is both a legal and a sociological one. It does not attempt to study the internal workings of bankruptcy, but the authors look outward to the larger population of bankrupt debtors. Using a multi-disciplinary approach, the authors have drawn social and economic portraits of typical debtors against the backdrop of the law and with hard empirical data.

From the back cover blurb:

Bankruptcy in America is a booming business, with hundreds of thousands of ordinary Americans filing for bankruptcy each year. Is this dramatic growth a result of mushrooming debt or does it reflect a moral decline that permits that middle class to evade their debts? As We Forgive Our Debtors addresses these questions with hard empirical data drawn from bankruptcy court filings. The authors of this multidisciplinary study describe the law and the statistics in clear, nontechnical language, combining a thorough statistical description of the social and economic position of consumer bankrupts with human portraits of the debtors and creditors whose journeys have ended in bankruptcy court.

Winner of the 1990 Silver Gavel Award of the American Bar Association.

Review by Susan Pannell
From Turnarounds and Workouts, November 15, 1999

So you think you know the profile of the average consumer debtor: either a deadbeat slouched on a sagging sofa with a three-day growth on his chin or a crafty lower-middle class type opting for bankruptcy to avoid both poverty and responsible debt repayment.

Except that it might be a single or divorced female who's the one most likely to file for personal bankruptcy protection, and her petition might be the last stage of a continuum of crises that began with her job loss or divorce. Moreover, her dilemma might be attributable in part to a consumer credit industry that has increased its profitability by relaxing its standards and extending credit to almost anyone who can scribble his or her name on an application.

Such are among the unexpected findings in this painstaking study of 2,400 bankruptcy filings in Illinois, Pennsylvania, and Texas during the seven-year period from 1981 to 1987. Rather than relying on case counts or gross data collected for a court's administrative records, as has been done elsewhere, the authors use data contained in the actual petitions. In so doing, they offer a unique window into debtors' lives.

The authors conclude that people who file for bankruptcy are, as a rule, neither impoverished families nor wily manipulators of the system. Instead, debtors are a cross-section of America. If one demographic segment can be isolated as particularly debt-prone, it would be women householders, whom the authors found often live on the edge of financial disaster. Very few debtors (3.7 percent in the study) were repeat filers who might be viewed as abusing the system, and most (70 percent in the study) of Chapter 13 cases fail and become Chapter 7s. Accordingly, the authors conclude that the economic model of behavior - which assumes a petitioner is a "calculating maximizer" in his decision to seek bankruptcy protection and his selection of chapter to file under, a profile routinely used to justify changes in the law is at variance with the actual debtor profile derived from this study.

A few stereotypes about debtors are, however, borne out. It is less than surprising to learn, for example, that most debtors are simply not as well off as the average American, or that while bankrupts' mortgage debts are about average, their consumer debts are oft the charts. Petitioners seem particularly susceptible to the siren song of credit card companies. In the study sample, creditors were found to have made between 27 percent and 36 percent of their loans to debtors with incomes below $12,500 (although the loans might have been made before the debtors' income dropped so low). Of course, the vigor with which consumer credit lenders pursue their goal of maximizing profits has a corresponding impact on the number of bankruptcy filings.

The book won the ABA's 1990 Silver Gavel Award. A special 1999 update by the authors is included exclusively in the Beard Books reprint edition.

From Science:

A landmark contribution, not only to the bankruptcy literature but also to our understanding of how consumers utilize credit resources available in our economy.

From Michigan Law Review:

With clarity and readability...the authors reveal...sometimes pathbreaking data about actual debtors and creditors.

From Brady Williamson, Chairman of the National Bankruptcy Review Commission

Ten years ago, this was an important book...Today, with more bankruptcies than ever, it's an essential book.

Credit cards, consumer debts and bankruptcies are more a part of American culture than ever before... That's why this book's relevance and impact have only grown. 

The best books improve with age...This pioneering work on law, sociology and economics has become a classic, more relevant now than the day it was published.

From Choice

"In this volume the authors study the characteristics of Chapter 13 and Chapter 7 bankruptcy filers, based on a sample of about 1,300, and recommendchanges in bankruptcy laws based on these findings. . . . {The study examines} bankruptcy law and compares filers to the general population in terms of income, occupation, assets, marital status, and special circumstances leading to filing such as credit card abuse, income interruptions, and heavy medical expenses. They also examine such . . . bankruptcy issues as repeat filings and debtors' ability to pay, and . . . {consider} some myths about who files and howoften filers repeat." (Choice) Index.

A  fascination picture of patterns of bankruptcy. Accessible to the general reader....


From H.H. Ulbrich - Choice  
{This book is} written in clear, nontechnical language. . . . Because thedata files are not supplemented with interviews, the authors' reconstructionsare rather speculative, but, overall, they present a fascinating picture of patterns of bankruptcy. Accessible to the general reader; particularly useful for collections in consumer law, consumer economics, and related areas.
From Terence C. Halliday - Contemporary Sociology  
Sullivan, Warren, and Westbrook's singular achievement is to have produced the most comprehensive, empirically exhaustive, and legally sensitive profile of the consumer casualties of capitalism. . . . {Their book} is replete withpithy and often tantalizingly abbreviated capsules of what bankruptcy is about in American society. . . . For sociolegal scholarship, this book is a methodological treat. . . . It is extremely well written in a tone of exploration and discovery, and--dare one say--with wit. . . . It is a rare book, indeed, that can effectively engage lawyers, bankers, policy makers, and social scientists on each of their respective terrains. For that reason alone, {it} warrants careful attention and broad recognition.
Landmark Study of Consumer Bankruptcy in the U.S., May 16, 2000
Reviewer: Reader (

As We Forgive Our Debtors is a result of a landmark study of bankrupt debtors in the 1980s. The authors, three of the leading experts on bankruptcy in the United States, focus on who files for bankruptcy. Contrary to widespread myth, most bankrupts are not irresponsible spendthrifts who could afford to pay their debts. Instead, they cross all income and occupational levels. What they do have in common is they have insurmountable financial problems resulting from crises in their lives, including divorce, job loss, and medical problems.

What is perhaps most disturbing is that single women have been and are increasingly filing for bankruptcy, thanks to their much lower salaries to begin with. It is this group who would suffer most from any kind of so-called bankruptcy reform.

This book, while it is geared for an academic market, is actually highly readable, with copious footnotes at the end of each chapter. The book, while originally published in 1989, is more timely than ever as Congress is considering a fatally flawed bankruptcy reform bill which would be devasting to the vast majority of people filing for bankruptcy but a boon to the credit card industry.

I highly recommend this book.

Elizabeth Warren is Leo Gottlieb Professor of Law at Harvard University and Robert Braucher Visiting Professor of Law in 1992. She received her BS from the University of Houston in 1970, and her JD from Rutgers University in 1976.   

Teresa A. Sullivan is Vice President and Graduate Dean, The University of Texas at Austin.Professor and Vice President and Dean of Graduate Studies Teresa A. Sullivan completed her Ph.D. at the University of Chicago. She is a labor force demographer. She is also past Secretary of the American Sociological Association, past Chair of the Section on Social, Economic, and Political Science of the American Association for the Advancement of Science, and a member of the Sociological Research Association. She received the Silver Gavel Award from the American Bar Association for her book As We Forgive Our Debtors.

Jay Lawrence Westbrook, Benno C. Schmidt Chair of Business Law, The University of Texas at Austin, is one of the nation's most distinguished scholars in the field of bankruptcy, and a pioneer in empirical studies in this area.  He has been Visiting Professor at Harvard Law School and the University of London, and is a member of the American Law Institute, the National Bankruptcy Conference, and the American College of Bankruptcy. He serves as a consultant to the International Monetary Fund and the World Bank and has also served as the United States Reporter for the ALI's Transnational Insolvency Project and as co-head of the United States delegation to the UN (UNCITRAL) conference on international insolvency.


1. Introduction 3
2. The Basic Information -- A Little Law and a Few Numbers 15
3. The People 49
4. A Financial Portrait of People in Bankruptcy 63
5.  Debtors at Work: Occupations and Industries 84
6. The Entrepreneurs 108
7. The Homeowners 128
8. Women and Bankruptcy 147
9. Medical Debt and Bankruptcy 166
10. Credit Card Junkies 178
11. The Repeaters 191
12. Can These Debtors Pay? 199
13. Laws, Models and Real People 230
14. The Other Players 273
15. Commercial Lending 282
16. Reluctant Creditors 293
17. The Consumer Credit Industry 302
18.  Conclusion: Bankruptcy and Consumer Credit System 328
Appendix: Data and Methods 342
List of Tables and Figures 355
Index 359

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