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Comment by mothballed | Hacker News Reader

Bankruptcy won't even discharge the kind of debt many/most of the lower-middle class fall broke upon. Alimony, child support, student loans, "restitution."

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This claim is simply false. The cause of bankruptcy in the U.S. has been extensively studied and absolutely none of the criteria you list comes even close to the number 1 reason that people in lower or middle class declare bankruptcy: medical bills.

What? You mean to tell me people file bankruptcy over the kinds of debt they can actually discharge and less so over the kinds of debt they can't?

That doesn't prove anything other than people filing bankruptcy aren't morons.

If the only thing you could discharge were gambling debts, there would be an equally specious claim that people aren't going broke over medical debt because 80% of bankruptcies cite gambling debts as the cause.

I'm not trying to prove anything. I am pointing out that your claim about the cause of many/most lower and middle class people's bankruptcy is false.

I did not make that claim. I made the following:

  Bankruptcy won't even discharge the kind of debt many/most of the lower-middle class fall broke upon.

The whole point was that bankruptcy wasn't a remedy discharging these forms of going broke. It's unsurprising the bankruptcy data leans towards a 'cause' that will actually discharge their debt, otherwise the incentive for a broke person to file bankruptcy is lowered.

Most of the lower-middle class do not fall broke upon the things you listed.

Looks like there's equivocation about "bankrupt" and "broke". To me you can be broke without going through the legal bankruptcy process.

They never made that claim.

This claim is false:

>Bankruptcy won't even discharge the kind of debt many/most of the lower-middle class fall broke upon.

Most of the lower-middle class do not go broke upon the listed criteria.

Average medical debt per person in 2020 was $430 per [0].

By comparison, in year 2006, there was 2.55B$ in arrears in my state of Arizona when it had ~5.5 million people, or an average of $463 per person. Not even adjusted for inflation. [1]

If you set the bar at medical debt, which you seem to have, it seems to have passed it on child support alone. And that is with a quite uncharitable handicap against me, as I'm comparing the 2006 child arrears numbers I found against 2020 dollars of medical debt.

[0]https://pmc.ncbi.nlm.nih.gov/articles/PMC8293024/

[1]https://www.opnff.net/Files/Admin/Assessing%20Child%20Suppor...

No, it isn’t that well studied; and I’d be interested to see your source and confirm that it doesn’t trace back to a study that says something more like “A new study from academic researchers found that 66.5 percent of all bankruptcies were tied to medical issues —either because of high costs for care or time out of work”. (https://www.cnbc.com/2019/02/11/this-is-the-real-reason-most...)

Bankruptcy at this point is just a way to signal to creditors not to lend more money to this individual. As you said alimony, child support, student loans, restitution are a must so the filing simply is a formal notice that "every penny this person ever earns is already earmarked, heed this warning before lending"

It's quite convenient though that it actually discharges the kind of debts rich people and businesses are more likely to accrue, while not discharging the kind of debts the middle/lower classes are likely to accrue when they're unable to pay them.

Agree. Also convenient that the warning I mentioned benefits those in the business of extending credit

What restitution is the average american on the hook for these days?

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