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Future Massachusetts Senator did influential bankruptcy research

Since 2012, Elizabeth Warren has been one of Massachusetts' two U.S. Senators. Earlier in life she was a law professor, focusing on bankruptcy law and consumer economics. In the 1980s, while teaching bankruptcy law at the University of Texas at Austin Law School, the future Senator conducted some groundbreaking research on personal bankruptcy.

Unlike traditional legal scholars, who focused on case law and abstract principles, Professor Warren dug into the underlying factual data and focused on the outcomes for ordinary people. She and two colleagues traveled to courthouses around the country collecting data on 2,400 personal bankruptcy filings.

She found that those who filed for personal bankruptcy were typically middle-class citizens with steady jobs. Many were homeowners. But, they faced serious financial trouble when hit with unexpected life changes like unemployment or a serious illness. Warren concluded the law tended to favor the interests of banks and credit card companies while making life more difficult for ordinary people. She began to argue that consumers needed more legal safeguards from the power of financial institutions. In 1995 she argued in vain against a revision of the Bankruptcy Code that would make it even more difficult for ordinary people to obtain debt relief.

Filing for personal bankruptcy can provide a fresh start for hardworking people facing overwhelming medical expenses, credit card debt or unemployment. In a Chapter 7 bankruptcy the debtor can receive a complete discharge from many forms of debt. A Chapter 13 bankruptcy allows the debtor to set up a schedule of manageable payments, at the end of which any remaining dischargeable debt is eliminated. Choosing which form of bankruptcy to file requires a detailed analysis of one's individual financial situation.

Source: Texas Tribune, "How a decade in Texas changed Elizabeth Warren," Isabelle Taft, July 13, 2016

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