Common sense says that bankruptcy filings rise when families are wiped out after a hurricane. And the data back it up. Peter Gosselin at the L.A. Times gives the first report of a data analysis put together by Professor Robert Lawless at University of Nevada Las Vegas. I’ll write more on this after my class this morning, but take a preliminary look for now.
The data are staggering: the growth in bankruptcy filings is about 50% higher in states hit by hurricanes and about 34% higher in nearby states. But Gosselin has done more: He’s interviewed a bankruptcy judge, a Republican former-staffer and bankruptcy practitioner, and the chairman of the National Bankruptcy Review Commission to see what they think will happen when the Katrina victims turn to bankruptcy. Their conclusion is unanimous: they will have a much harder time getting back on their feet if the new bankruptcy law has been implemented. The only dissenter? A credit industry lobbyist who, once again, says the bill is just fine.