UNC School of Law Graham Kenan Professor Melissa B. Jacoby’s new book, “Unjust Debts: How Our Bankruptcy System Makes America More Unequal,” offers a groundbreaking examination of the U.S. bankruptcy system. Drawing on her professional experience as a law clerk in federal bankruptcy court and a staff attorney for the National Bankruptcy Review Commission combined with extensive primary-source research, Jacoby provides unique insights into America’s busiest federal court, revealing how a system designed to provide relief has instead become a tool that too often perpetuates inequality. “Unjust Debts” explores how an expansive interpretation of the national bankruptcy power unduly encroaches on other laws and policies and calls for a more limited and effective bankruptcy system going forward.
In this eye-opening work, Jacoby takes readers on a journey through the complex world of bankruptcy law, using accessible stories to illustrate how powerful entities extract benefits from the system while the system simultaneously falls short on core objectives: to provide essential debt relief for struggling families and to treat creditors fairly. Her analysis shows how the bankruptcy system has ripple effects beyond its traditional domain, intersecting with numerous aspects of American life, from health care and employment law to civil rights and environmental issues. This broad scope makes the book valuable not only to bankruptcy specialists but also to lawyers in other fields impacted by bankruptcy in unexpected ways.
One of the book’s most striking revelations is the way corporations and nonprofits have come to conceptualize bankruptcy as a way to manage accusations of wrongdoing rather than to restructure debt. Jacoby cites examples including Johnson & Johnson, the Boy Scouts of America, and various Catholic dioceses, explaining how changes to the bankruptcy system in 1978 unintentionally opened the door to these uses of the system for enterprises without traditional debt problems that seek to permanently cap liability for alleged wrongdoing. While these bankruptcies often come with promises of fair treatment for claimants and job preservation, Jacoby’s research uncovers a troubling pattern of faulty predictions and broken promises.
Similar concerns arise in municipal bankruptcies. Building on her previous study of the historic Detroit bankruptcy, Jacoby dedicates a chapter of “Unjust Debts” to exploring how such cases affect people who allege the city, or its employees, have violated their civil rights. Her research shows how the need to make deals with more powerful creditors leaves victims of police brutality sidelined in negotiations, with the loss of legal rights and low financial recoveries to follow. For readers seeking a concise overview of this complex issue, Jacoby’s essay in The Nation provides additional insights.
Throughout the book, Jacoby’s analysis transcends political boundaries, consistent with the bipartisan nature of most bankruptcy legislation. By exploring issues like federalism, rule of law, and advocating for a narrow interpretation of the national bankruptcy power while calling for the elimination of racial disparities in legal protections, she offers a balanced approach to addressing systemic problems that resonate across the ideological spectrum.
Critics and economic experts have taken note of Jacoby’s work. The Financial Times included “Unjust Debts” in its list of best summer economics books for 2024, with Chief Economic Correspondent Martin Wolf praising its disturbing revelations about how bankruptcy law favors corporations over individuals. Publishers Weekly and Kirkus Reviews have added their voices to the chorus of acclaim, lauding the book’s clarity and its exposure of racial, class, and corporate biases in the bankruptcy system.
Published on June 11, 2024, by The New Press, “Unjust Debts” is now available in hardcover at bookstores nationwide and online retailers. This important work is already sparking crucial conversations about the role of bankruptcy in American society, cementing Jacoby’s place as a leading voice in the ongoing debate about economic justice and the need for legal reform.
Jacoby’s book joins a series of recent notable publications by Carolina Law faculty. Willie Person Mangum Distinguished Professor Joseph Kennedy, released two valuable resources for law students and practitioners: “A Short and Happy Guide to Criminal Law” and “Criminal Law in a Nutshell”. Additionally, Michael Gerhardt, Burton Craige Distinguished Professor of Jurisprudence contributed to the public discourse on presidential powers with his books “FDR’s Mentors: Navigating the Path to Greatness” and “The Law of Presidential Impeachment: A Guide for the Engaged Citizen.”
