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 …

Auto lenders were perhaps the biggest winners of the 2005 Bankruptcy Reform. Cars depreciate quickly, so borrowers … to the market value of the car through a "cramdown" in Chapter 13 bankruptcy. The Reform prohibited cramdowns during the … eliminating cramdowns affected only one of the two types of consumer bankruptcy: Chapter 13. They exploit persistent historical …

This paper studies the optimal determination of bankruptcy exemptions for risk averse borrowers who use unsecured … sufficient to determine whether a bankruptcy exemption level is optimal, or should be increased or decreased. These variables are …' leverage, the borrowers' bankruptcy probability, and the change in bankrupt borrowers' consumption. An application of the …