Abstract

http://ssrn.com/abstract=1310304
 
 

References (25)



 
 

Citations (12)



 


 



Seismic Effects of the Bankruptcy Reform


Donald P. Morgan


Federal Reserve Bank of New York

Benjamin Charles Iverson


Northwestern University - Kellogg School of Management

Matthew Botsch


affiliation not provided to SSRN

February 1, 2009

FRB of New York Staff Report No. 358

Abstract:     
We argue that the 2005 bankruptcy abuse reform (BAR) contributed to the surge in subprime foreclosures that followed its passage. Before BAR, distressed mortgagors could free up income by filing bankruptcy and having their unsecured debts discharged. BAR blocks that maneuver for better-off filers by way of a means test. We identify the effects of BAR using state home equity bankruptcy exemptions; filers in low-exemption states were not very protected before BAR, so they would be less affected by the reform. Difference-in-difference regressions confirm four predictions implied by that identification strategy. Our findings add to research trying to explain the surge in subprime foreclosures and to a broader literature on household bankruptcy demand and credit supply.

Number of Pages in PDF File: 30

Keywords: bankruptcy, subprime foreclosures, subprime mortgages, unsecured debt, credit card debt, home equity exemptions

JEL Classification: G21, G33, K35

working papers series





Download This Paper

Date posted: December 2, 2008 ; Last revised: September 18, 2012

Suggested Citation

Morgan, Donald P. and Iverson, Benjamin Charles and Botsch, Matthew, Seismic Effects of the Bankruptcy Reform (February 1, 2009). FRB of New York Staff Report No. 358. Available at SSRN: http://ssrn.com/abstract=1310304 or http://dx.doi.org/10.2139/ssrn.1310304

Contact Information

Donald P. Morgan (Contact Author)
Federal Reserve Bank of New York ( email )
33 Liberty Street
Research Department
New York, NY 10045
United States
212-720-6573 (Phone)
Benjamin Charles Iverson
Northwestern University - Kellogg School of Management ( email )
Evanston, IL 60208
United States
Matthew Botsch
affiliation not provided to SSRN
Feedback to SSRN


Paper statistics
Abstract Views: 1,412
Downloads: 188
Download Rank: 95,028
References:  25
Citations:  12

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.282 seconds