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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
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Designed to Fail : Effects of the Default Option and Information Complexity on Student Loan Repayment
Cox, James C. - 2018
We ask why so few student loan borrowers enroll in Income Driven Repayment when the majority would benefit from doing so. To do so we run an incentivized laboratory experiment using a facsimile of the government's Student Loan Exit Counseling website. We test the role information complexity,...
Persistent link: https://www.econbiz.de/10012480909
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A Simple Test of Adverse Events and Strategic Timing Theories of Consumer Bankruptcy
Gan, Li - 2005
the bankruptcy decision or not. For the strategic timing theory such decisions are endogenous, while for the adverse … events theory they are not. Hausman tests for endogeneity show that financial benefit, unsecured debt, and non-exempt assets … are exogenous with the bankruptcy decision, consistent with the adverse events theory …
Persistent link: https://www.econbiz.de/10012466908
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Credit, Bankruptcy, and Aggregate Fluctuations
Nakajima, Makoto - 2014
theory of unsecured credit account for the high volatility and procyclicality of credit and the high volatility and …
Persistent link: https://www.econbiz.de/10012458048
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Refinancing Frictions, Mortgage Pricing and Redistribution
Berger, David; Milbradt, Konstantin; Tourre, Fabrice; … - National Bureau of Economic Research - 2024
There are large cross-sectional differences in how often US borrowers refinance mortgages. In this paper, we develop an equilibrium mortgage pricing model with heterogeneous borrowers and use it to show that equilibrium forces imply important cross-subsidies from borrowers who rarely refinance...
Persistent link: https://www.econbiz.de/10014468222
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Creditor-on-Creditor Violence and Secured Debt Dynamics
Antill, Samuel; Wang, Neng; Jiang, Zhaoli - National Bureau of Economic Research - 2024
Secured lenders have recently demanded a new condition in distressed debt restructurings: competing secured lenders must lose priority. We model the implications of this "creditor-on-creditor violence" trend. In our dynamic model, secured lenders enjoy higher priority in default. However,...
Persistent link: https://www.econbiz.de/10015056182
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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
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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
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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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Moral and Social Constraints to Strategic Default on Mortgages
Guiso, Luigi - 2009
We use survey data to study American households' propensity to default when the value of their mortgage exceeds the value of their house even if they can afford to pay their mortgage (strategic default). We find that 26% of the existing defaults are strategic. We also find that no household...
Persistent link: https://www.econbiz.de/10012463505