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Does Increasing Access to Formal Credit Reduce Payday Borrowing?
Miller, Sarah - 2020
The use of high cost "payday loans" among subprime borrowers has generated substantial concern among policymakers. This paper provides the first evidence of substitution between "alternative" and "traditional" credit by exploiting an unexpected positive shock to traditional credit access among...
Persistent link: https://www.econbiz.de/10012481086
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Can the Unemployed Borrow? Implications for Public Insurance
Braxton, J. Carter - 2020
We show that unemployed individuals maintain significant access to credit. Following job loss, the unconstrained borrow, while the constrained default and delever. Both defaulters and borrowers are using credit to smooth consumption. We quantitatively show that long-term credit relationships and...
Persistent link: https://www.econbiz.de/10012481983
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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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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
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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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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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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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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
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Saving Your Home in Chapter 13 Bankruptcy
White, Michelle J. - 2008
This paper examines how filing for bankruptcy under Chapter 13 helps financially distressed debtors save their homes. We develop a model of debtors' decisions to default on their mortgages and file for bankruptcy under Chapter 13 and evaluate the model using new data on Chapter 13 bankruptcy...
Persistent link: https://www.econbiz.de/10012464468