According to some analyses, the increase in consumer bankruptcy filings has adverse financial consequences for our nation's economy. For instance, it was estimated that in 1997 alone more than $44 billion of debt was discharged by debtors who filed for bankruptcy relief, a figure when amortized on a yearly basis amounts to a loss of at least $110 million every day. These losses, according to one estimate, translate into a $400 annual 'tax' on every household in our nation. In 2003, the Nilson Report (a credit industry newsletter) announced that issuers of proprietary and general purpose credit cards 'lost $18.9 billion in 2002 from consumer bankruptcy filings,' an increase of 15.1 percent over the prior year. The Credit Union National Association (CUNA) reported that credit unions, as of 2002, lost 'nearly $3 billion from bankruptcies' since Congress began its consideration of bankruptcy reform legislation in 1998.

3. Potential Bankruptcy Abuse

A third factor motivating comprehensive reform is that the present bankruptcy system has loopholes and incentives that allow and -- sometimes even encourage -- opportunistic personal filings and abuse. A civil enforcement initiative undertaken in 2002 by the United States Trustee Program (a component of the Justice Department charged with administrative oversight of bankruptcy cases) has consistently identified such problems as debtor misconduct and abuse, misconduct by attorneys and other professionals, problems associated with bankruptcy petition preparers, and instances where a debtor's discharge should be challenged.

4. Debtors' Ability to Repay Debt

A fourth factor relates to the fact that some bankruptcy debtors are able to repay a significant portion of their debts, according to several studies. Current law, however, has no clear mandate requiring these debtors to repay their debts. According to the National Association of Bankruptcy Trustees, '[w]hile there is a universal agreement among the courts that an individual debtor's ability to repay his or her debts from future earnings is, at the very least, a factor in determining whether substantial abuse would occur in a chapter 7 case, there are differences among the courts as to the extent to which they rely on a debtor's ability to repay.'