THE BANKRUPTCY CRISIS IN CHICAGO reach-highest-level-since-crisis ( March 10 , 2017 )].
Fourth , Chicago was a creditor ’ s “ paradise ” and the worst place in the country to be a debtor . One attorney opined that Illinois collection laws were made by creditors for their own benefit .
[ Footnote : The authors note that the Commercial Law League is based near Chicago ( in Wauconda , Illinois ). “ Since 1895 , The CLLA has been associated with the representation of creditor interests ...” http :// clla . org /? page = about _ mission .]
Was it the attorneys ’ fault ?
Or was it the fault of Chicago ’ s aggressive bankruptcy bar ?
Bankrupt in 10 reported that both the U . S . Attorney ’ s office and the Chicago Bar Association were both investigating the “ city ’ s skyrocketing bankruptcy rate ” in 1957 . One of your authors ( Mr . Fox ) obtained statements from an Assistant U . S . Attorney in Chicago , Nicholas Manos . Mr . Manos identified six Chicago attorneys who were responsible for 50 % of the wage earner bankruptcy filings . Initially , these attorneys obtained their clients from tipsters who fed them names of potential debtor clients . Quoted in Bankruptcy in 10 , Chicago based U . S . Attorney Robert Tieken estimated that in 1956 , three of the six attorneys filed 1,300 consumer bankruptcy cases and grossed ( between them ) about $ 260,000.00 .
[ Footnote : Most modern consumer bankruptcy attorneys are just small time operators . According to Dollar Times , “$ 260,000.00 in 1956 had the same buying power as $ 2,342,250.75 in 2017 .” http :// www . dollartimes . com / calculators / inflation . htm .]
At one time , Landon L . Chapman was Chicago ’ s busiest bankruptcy attorney . Mr . Chapman identified the causes of the bankruptcy uptick : the increase in easy consumer credit ; unemployment ; and the breakup of families and abandonment by fathers of their families . Mr . Chapman suggested prohibiting deficiencies on repossessed automobiles and asking merchants to be more liberal about taking back merchandise when a consumer cannot make the payments .
[ Footnote : Chicago Daily Law Bulletin , What ’ s Behind the Increase in Voluntary Bankruptcies Here ?, November 29 , 1960 .]
Landon Chapman believed that “ bankruptcy-made-easy ” was the best weapon a little man had against “ unscrupulous credit merchants and money lenders .” Mr . Chapman had 21 employees , including three attorneys . Chapman ’ s fees ranged from $ 0.00 to $ 1,800.00 ; $ 300.00 was an average fee for an individual liquidation . Unlike today ’ s practice in chapter 7 , Mr . Chapman extended credit to his bankrupt clients , who then paid their fees over time . Surprisingly , Mr . Chapman estimated that his collection rate ran about 85 %. ( One room in Mr . Chapman ’ s law office had a sign with title “ Credit Office .” Chapman had an active collections department to collect his fees .) In the 1950s , Mr . Chapman ’ s gross income had ranged from $ 250,000 to $ 500,000 with Mr . Chapman personally netting between $ 14,000 to $ 45,000 annually .
[ Footnote : Chicago Daily News , How to Halt Bankruptcy Binge , October 15 , 1957 ; Chicago Sun- Times , Why Many Here File for Bankruptcy , January 1963 .]
Not everyone agreed with Mr . Chapman . In an anonymous letter to the editor , a collector identified three groups of debtors . The first group ( moral and upright ) fell into debt -- but responsibly paid their obligations though often over an extended period . The second group of debtors would dispute the debts , hire counsel , and negotiate some lesser payment amount . The third group , the ones who file bankruptcy , do not contact their creditors after running up debts . The collector , name withheld , concluded his letter with the hope that the bankruptcy mills could be “ stamped out in Chicago .”
[ Footnote : Chicago Daily News , undated but likely shortly after October 1957 .]
A senior vice president of Wells Fargo Bank opined that people were regarding bankruptcy too casually . Carl S . Hobbed , from the Credit Bureau of Cook County , observed that bankruptcy filings reflected “ a moral breakdown ” and a “ cancer .” Bankruptcy , he stated , was once “ a word of shame ” but no more .
[ Footnote : Chicago Sun- Times , Why Many Here File for Bankruptcy , January 1963 .]
Chicago , 2017
Flash forward to Chicago , 2017 . The problems with consumer bankruptcies are still unresolved , and Chicago itself may be heading toward chapter 9 . Ironic , don ’ t you think ?
[ Footnote : John Pletz , Is bankruptcy such an awful idea for Chicago ? Crain ’ s Chicago Business , http :// www . chicagobusiness . com / article / 20160622 / NEWS02 / 160619845 / isbankruptcy-such-an-awful-ideafor-chicago .]
National Association of Consumer Bankruptcy Attorneys Summer 2017 CONSUMER BANKRUPTCY JOURNAL 31