I clerked for a bankruptcy judge for over two years, so I've seen pretty much everything in terms of bankruptcy (both individual and corporate). I used to review every Chapter 13 petition that came through our chambers -- so I would see what everybody owned and what their budgets were and income and everything. It was very interesting, and a good dose of reality. You'd see people with kids and hardly any income trying to get by on $200 a month for food, and you'd see people with luxury cars and boats, coming into court with their Louis Vuitton handbags. My judge's pet peeve was debtors paying 10% to their credit cards and keeping their Lexus or Cadillac and their $100 per month cell phone. I don't personally have a problem with a Chapter 13 debtor keeping a nice car if she's paying 100% to all her unsecured creditors. In that case, she's just using bankruptcy to sort of protect her from creditor collection efforts and get everything together.
There are some abuses, but overall I think that bankruptcy is a very valuable tool for those who need it. In that respect we've come a long way -- at least we don't have debtors' prison any more (although some of my clients now would not agree). Most people I saw were really trying to turn their lives around, I think.
You'd think that with my experience in the area I wouldn't have run up a huge credit card debt, right? Oh well. I'm learning the hard way. If you know any large firm in Chicago that wants to hire a bankruptcy associate, let me know. I could use the $$$.
