It's Time for Means-Testing

Edith H. Jones

U.S. Court of Appeals for the Fifth Circuit

Todd J. Zywicki

George Mason University School of Law; PERC - Property and Environment Research Center

Brigham Young University Law Review, February 1999

Despite an extended period of high economic growth and low unemployment, consumer bankruptcy rates have hit an all-time high. In response to this personal bankruptcy boom, Congress proposed "means-testing" debtors, requiring upper middle-class debtors to opt for Chapter 13, rather than Chapter 7. Means testing rests on the sound moral intuition that those who can pay a substantial portion of their debts with minimal hardship should be required to do so. The urgency for means-testing is amplified by the underlying dynamics driving the bankruptcy boom. Recent research shows that the rapid increase in bankruptcy filing rates is being driven by two factors, reductions in the economic costs of filing bankruptcy and a decline in the social stigma and personal shame associated with bankruptcy filings. Because the reduction in shame and stigma operates most heavily at the margin for high-income debtors, it can be predicted that the number of high-income debtors who file bankruptcy can be expected to continue to increase in coming years, thereby making means testing increasingly urgent. Finally, other factors such as increased debt, increased credit card debt, and certain sociological factors are shown to be lacking empirical foundation.

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Date posted: December 15, 1998  

Suggested Citation

Jones, Edith H. and Zywicki, Todd J., It's Time for Means-Testing. Brigham Young University Law Review, February 1999. Available at SSRN: http://ssrn.com/abstract=141470

Contact Information

Edith H. Jones
U.S. Court of Appeals for the Fifth Circuit
U.S. Courthouse
515 Rusk Street Room l2505
Houston, TX 77002-2655
United States
713-250-5484 (Phone)
Todd J. Zywicki (Contact Author)
George Mason University School of Law ( email )
3301 Fairfax Drive
Arlington, VA 22201
United States
703-993-8091 (Phone)
703-993-8088 (Fax)

George Mason Law School Logo

PERC - Property and Environment Research Center
2048 Analysis Drive
Suite A
Bozeman, MT 59718
United States

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