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http://ssrn.com/abstract=1208151
 
 

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A Study of Consumers' Post-Discharge Finances: Struggle, Stasis, or Fresh-Start?


Jay Zagorsky


Ohio State University (OSU) - Center for Human Resource Research

Lois R. Lupica


University of Maine School of Law

Spring 2008

American Bankruptcy Institute Law Review

Abstract:     
The postwar U.S. has experienced an extremely sharp rise in consumer bankruptcies. What happens to these consumers financially after filing for bankruptcy? Do filers catch up with their non-filing peers, stay at a constant distance or fall further behind over time? This question is investigated empirically using a new set of financial and bankruptcy data obtained from a large national random survey of bankruptcy filers and non-filers. Along some simple financial dimensions, such as car ownership, bankruptcy filers are not disadvantaged compared to non-filers. Along more complex indicators, such as total income and net worth, filers catch up over time but it takes between a dozen and two dozen years. The theoretical justification for allowing consumers to file bankruptcy is to afford debtors a fresh start, in essence, a restoration of financial well-being. Results suggest the U.S. bankruptcy system does not immediately provide consumers with a fresh start; the average filer takes many years to restore their financial well-being.

Number of Pages in PDF File: 37

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Date posted: August 7, 2008  

Suggested Citation

Zagorsky, Jay and Lupica, Lois R., A Study of Consumers' Post-Discharge Finances: Struggle, Stasis, or Fresh-Start? (Spring 2008). American Bankruptcy Institute Law Review. Available at SSRN: http://ssrn.com/abstract=1208151

Contact Information

Jay Zagorsky
Ohio State University (OSU) - Center for Human Resource Research ( email )
921 Chatham Lane
Suite 200
Columbus, OH 43221
United States
Lois R. Lupica (Contact Author)
University of Maine School of Law ( email )
246 Deering Avenue
Portland, ME 04102
United States
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