We propose a parsimonious model with adverse selection where delinquency, renegotiation, and bankruptcy all occur in … equilibrium as a result of a simple screening mechanism. A borrower has private information about her cost of bankruptcy, and a …, and thus become delinquent. The lender renegotiates with some delinquent borrowers. In the absence of renegotiation …

. Finally, we find that those debtors who misreported income had a lower probability of default on their debt repayment plans …

We ask whether the correlation between mortgage leverage and default is due to moral hazard (the causal effect of … leverage must weigh default-prevention against market distortions due to adverse selection …

specify default, renegotiation and reorganization policies. Renegotiation entails a redistribution of social surplus, while … monitoring is too costly, renegotiation leads to reorganization, which resembles actual bankruptcy practice. We calibrate the …-trivial choice between alternative bankruptcy procedures. Given limited commitment and asymmetric information, financial contracts …

about the role of liquidity, equity, income levels, and payment burden as determinants of mortgage default using a unique … may have been a more important predictor of mortgage default than equity, income level, or payment burden. Borrowers with … lead to lower default rates. A policy or pilot program could test the impact of this trade-off and, if impactful and cost …

Chapter 7 bankruptcy, the main debt relief program for U.S. households, provides more than $150 billion in debt relief … each year, yet its impact on consumers remains unclear. Using unique hand-collected data from individual bankruptcy …

Increasing personal bankruptcy protection raises consumers' desire to borrow and lenders' cost of extending credit; the … impact on equilibrium borrowing is ambiguous. Using bankruptcy protection changes between 1999 and 2005 across U.S. states …

This paper examines the disparity in default risk between vulnerable and non-vulnerable populations in consumer lending … the probability of default. We find that vulnerable individuals have a higher risk than non-vulnerable individuals …. Specifically, interest rates explain at least 30 percent of the risk gap. We also find that the default probabilities faced by …