The Medical Bankruptcy Myth

The American reports:

personal bankruptcy rates were actually higher in Canada. Personal bankruptcy filings as a percentage of the population were 0.20 percent in the United States during 2006 and 0.27 percent in 2007. In Canada, the numbers are 0.30 percent in both 2006 and 2007. The data are from government sources and defined in similar ways for both countries and cover the time period after the legal reforms to U.S. bankruptcy laws in 2005 and before the onset of the 2008 economic recession.

This is important, because the 2005 reforms produced U.S. legal standards for bankruptcy filing that are now very similar to Canada’s. Before 2005 it was much easier to file for bankruptcy in the United States, making cross-border comparisons prior to the legal changes meaningless. Further, in 2008 the United States was harmed by massive systemic home mortgage defaults that did not occur in Canada because of differences in mortgage lending practices.

Some myths die hard.