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Accounting for the Rise in Consumer Bankruptcies

Livshits, Igor - 2007

Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age population in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive financial intermediaries who can observe households' earnings, age and current asset...

Persistent link: https://www.econbiz.de/10012465287

Bankruptcy Reform and Credit Cards

White, Michelle J. - 2007

From 1980 to 2004, the number of personal bankruptcy filings in the United States increased more than five-fold, from 288,000 to 1.5 million per year. Lenders responded to the high filing rate with a major lobbying campaign for bankruptcy reform that led to the adoption in 2005 of the Bankruptcy...

Persistent link: https://www.econbiz.de/10012465386

Financial Innovation, the Discovery of Risk, and the U.S. Credit Crisis

Boz, Emine - 2010

Financial innovation and overconfidence about asset values and the riskiness of new financial products were important factors behind the U.S. credit crisis. We show that a boom-bust cycle in debt, asset prices and consumption characterizes the equilibrium dynamics of a model with a collateral...

Persistent link: https://www.econbiz.de/10012462633

The Effect of Principal Reduction on Household Distress : Evidence from Mortgage Cramdown

Cespedes, Jacelly C.; Parra, Carlos R.; Sialm, Clemens - National Bureau of Economic Research - 2021

Mortgage cramdown enabled bankruptcy judges to discharge the underwater portion of a mortgage during Chapter 13 bankruptcy before the Supreme Court disallowed this practice in 1993. We exploit the random assignment of cases to judges to quantify the ex-post effects of Chapter 13 bankruptcy over...

Persistent link: https://www.econbiz.de/10012585384

Pledgability and Liquidity : A New Monetarist Model of Financial and Macroeconomic Activity

Venkateswaran, Venky - 2013

When limited commitment hinders unsecured credit, assets help by serving as collateral. We study models where assets differ in pledgability - the extent to which they can be used to secure loans - and hence liquidity. Although many previous analyses of imperfect credit focus on producers, we...

Persistent link: https://www.econbiz.de/10012459653

Positive Externalities of Social Insurance : Unemployment Insurance and Consumer Credit

Hsu, Joanne W. - 2014

This paper studies the impact of unemployment insurance (UI) on consumer credit markets. Exploiting heterogeneity in UI generosity across U.S. states and over time, we find that UI helps the unemployed avoid defaulting on their mortgage debt. We estimate that UI expansions during the Great...

Persistent link: https://www.econbiz.de/10012458314

Special Purpose Vehicles and Securitization

Gorton, Gary - 2005

Firms can finance themselves on- or off-balance sheet. Off-balance sheet financing involves transferring assets to "special purpose vehicles" (SPVs), following accounting and regulatory rules that circumscribe relations between the sponsoring firm and the SPVs. SPVs are carefully designed to...

Persistent link: https://www.econbiz.de/10012467495

Macroeconomic Effects of Debt Relief : Consumer Bankruptcy Protections in the Great Recession

Auclert, Adrien - 2019

This paper argues that the debt forgiveness provided by the U.S. consumer bankruptcy system helped stabilize employment levels during the Great Recession. We document that over this period, states with more generous bankruptcy exemptions had significantly smaller declines in non-tradable...

Persistent link: https://www.econbiz.de/10012479637

The Economic Consequences of Bankruptcy Reform

Gross, Tal - 2019

A more generous consumer bankruptcy system provides greater insurance against financial risks, but it may also raise the cost of credit to consumers. We study this trade-off using the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which raised the costs of filing for...

Persistent link: https://www.econbiz.de/10012480198

Insolvency After the 2005 Bankruptcy Reform

Albanesi, Stefania - 2018

the effects of the reform on bankruptcy, insolvency, and foreclosure, we explore the mechanism generating these responses … 25% permanent rise in insolvency, but had no effect on Chapter 13 filings. Exploiting the cross-district variation in … higher monetary cost of filing for bankruptcy. We show that insolvency is associated with worse outcomes than bankruptcy, in …

Persistent link: https://www.econbiz.de/10012480589

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