What is the optimal consumer bankruptcy law? I examine this question in the context of an incomplete markets lifecycle … model with a planner who can choose state-contingent bankruptcy costs. I develop two key theoretical characterizations … filing. Second, it is optimal for the planner to always allow bankruptcy if the household cannot repay or would prefer an …

state-contingent policies. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 in particular generates a …

What are the positive and normative implications of eliminating bankruptcy protection for indebted individuals? Without … bankruptcy protection, creditors can collect on defaulted debt to the extent permitted by wage garnishment laws. The elimination …