This Article considers why consumer bankruptcy is so com-mon in the United States, focusing particularly on the role of property exemptions and how strategic behavior can make filing for bankruptcy attractive even to high-income households. To avoid such pathologies, this Article proposes changes to the bank-ruptcy system that would appropriately limit the attractiveness of the bankruptcy process. Part I briefly introduces the current personal bankruptcy system. Part II examines the economic justi-fication for having a personal bankruptcy procedure at all and argues that having such a system improves economic efficiency. However, the costs of the procedure rise more quickly than the benefits as the amount of assets exempt from the bankruptcy process increases. Thus, while exemptions from bankruptcy may sometimes be appropriate, the level should not be set too high. Part III then explores various strategies that households can use to increase their financial benefit from bankruptcy. This Part cal-culates the proportion of households that have a financial incen-tive to file for bankruptcy when they use these strategies. These calculations show that current U.S. bankruptcy laws are manipu-lated so easily that a majority of households can benefit finan-cially from bankruptcy if they plan in advance. Subject to occa-sional judicial limitations, many bankruptcy exemptions are in effect unlimited, which gives too many households an incentive to file for bankruptcy rather than to take responsibility for repaying their debts. Part III also analyzes the effect of adopting the ex-emption proposals of the National Bankruptcy Review Commis-sion and shows that they would greatly exacerbate current prob-lems. Finally, Part IV proposes a reform of the personal bank-ruptcy system under which debtors in bankruptcy would be re-quired to use both their current wealth and their future earnings to repay debt, with appropriate exemptions for both. The pro-posed reform would end the anomaly under the current system whereby some debtors obtain discharge of their debts in bank-ruptcy even though they have high incomes and, often, high wealth. Under the proposed reform, fewer households would have an incentive to file for bankruptcy, and debtors with a high abil-ity to repay their debts would be deterred from filing. Households that have low wealth and low income, however, would still benefit from the discharge of debt in bankruptcy and receive a "fresh start."