Oliver explained that while the process may help people escape a pile of debt, the system was not created to support Americans, as their credit score would get hit, and bankruptcy carries a “completely misguided” social stigma.
“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,” Oliver said on Sunday’s Last Week Tonight.
The host explained that the United States’ modern bankruptcy code was enacted in 1978 — around the same time the credit card industry was being deregulated — paralleling a sharp rise in consumer debt.
“And what the industry clearly wanted was people stuck in a lucrative cycle of minimum payments, late fees, and interest hikes,” said the host. “What they didn’t want spoiling that was people cutting the cycle short through bankruptcy.”
Oliver went on to explain that the credit card industry later lobbied Congress — prompting lawmakers to pass a bill that would make it more difficult and more expensive for Americans to file for personal bankruptcy.
Noting that there are two kinds of personal bankruptcy, Chapter 7 and Chapter 13, Oliver revealed that lawyers often pushed their clients, particularly their Black clients, to file for Chapter 13 — the more expensive option.
“Even bankruptcy discriminates against Black people,” Oliver added.
The host went on to expose who was a big supporter of the 2005 law, explaining that they are largely responsible for making personal bankruptcy even worse for Americans.
“One of the most prominent backers of that law is actually, the fucking president now,” Oliver exclaimed. “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.”
Oliver explained that when Sen. Elizabeth Warren (D-MA) was a Harvard University law professor studying bankruptcy, she testified before the Senate to warn against the law, explaining how detrimental debt can be, especially medical debt.
Biden responded by claiming that it was untenable to expect each business to be responsible for the debt of consumers, and “pay for the broken system.”
“Ok, but that’s not really how this works, is it?” said Oliver. “It’s not like we’re living in some small town in the 1920s, racking up debt to the corner store for groceries, the butcher shop for meat, and the local pharmacy for cough drops laced with weapons-grade cocaine.”
The host noted that instead, “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.”
Oliver went on to explain the now Biden-backed Consumer Bankruptcy Reform Act, proposed by Warren in December, which would “completely overhaul our bankruptcy system.”
Despite Biden’s approval of the act, it likely will not get passed in its entirety, as 10 Senate Republicans would also need to support it, because Democratic senators Joe Manchin (WV) and Kyrsten Sinema (AZ) “are still in a death cult over the filibuster for some reason.”
Watch above, via HBO.
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