Bankruptcy is the legal process whereby financially distressed firms, individuals, and occasionally governments resolve … their debts. The bankruptcy process for firms plays a central role in economics, because competition drives inefficient … corporate bankruptcy is to reduce the cost of default by having a government-sponsored procedure that resolves all debts …

Bankruptcy is the legal process whereby financially distressed firms, individuals, and occasionally governments resolve … their debts. The bankruptcy process for firms plays a central role in economics, because competition drives inefficient … corporate bankruptcy is to reduce the cost of default by having a government-sponsored procedure that resolves all debts …

"This paper examines how filing for bankruptcy under Chapter 13 helps financially distressed debtors save their homes … reduce the total amount owed. We develop a model of debtors' decisions to default on their mortgages and file for bankruptcy … and we evaluate it using a new dataset of debtors who filed for bankruptcy under Chapter 13 in 2006. We also examine the …