Thousands of U.S. households filed for bankruptcy just before the bankruptcy law changed in 2005. That rush-to-file was … more pronounced, we find, in states with more generous bankruptcy exemptions and lower credit scores. We take that finding … as evidence that the new law effectively reduces exemptions, which in turn should reduce the ?demand? for bankruptcy and …

We argue that the 2005 bankruptcy abuse reform (BAR) contributed to the surge in subprime foreclosures that followed … its passage. Before BAR, distressed mortgagors could free up income by filing bankruptcy and having their unsecured debts … home equity bankruptcy exemptions; filers in low-exemption states were not very protected before BAR, so they would be less …