Abstract

http://ssrn.com/abstract=894453
 
 

Citations (9)



 
 

Footnotes (266)



 


 



The Failure of Bankruptcy's Fresh Start


Katherine M. Porter


University of California - Irvine School of Law

Deborah Thorne


Ohio University - Department of Sociology


Cornell Law Review, Vol. 92, 2006
U Iowa Legal Studies Research Paper No. 05-46

Abstract:     
An untested assumption of Chapter 7 bankruptcy is that it rehabilitates debtors for a fresh start in the economy. Using original, longitudinal data, we examine this assumption against the realities of life after bankruptcy. Our findings challenge the fresh start as the theoretical underpinning for consumer bankruptcy relief. We found that just one year after bankruptcy, one in four debtors was struggling to pay routine bills, and one in three debtors reported an overall financial situation similar to, or worse than, when they filed bankruptcy. Our analysis of these data demonstrates that steady and sufficient income is the key to improved post-bankruptcy financial health. Factors that cause household income to decline, such as unemployment and underemployment, illness or injury, and old age, undermine the chances of financial recovery. These data reveal the limitations of bankruptcy as a social safety net and highlight the fragile economic situations of American families. We conclude that bankruptcy is an incomplete tool to rehabilitate those in financial distress, and we suggest adjustments to bankruptcy law and social programs that will improve the ability of consumers to achieve a fresh start after financial failure.

Number of Pages in PDF File: 63

Keywords: Bankruptcy, consumer bankruptcy, consumer credit, fresh start, consumer debt

JEL Classification: K29

Accepted Paper Series


Download This Paper

Date posted: April 3, 2006  

Suggested Citation

Porter, Katherine M. and Thorne, Deborah, The Failure of Bankruptcy's Fresh Start. Cornell Law Review, Vol. 92, 2006; U Iowa Legal Studies Research Paper No. 05-46. Available at SSRN: http://ssrn.com/abstract=894453

Contact Information

Katherine M. Porter (Contact Author)
University of California - Irvine School of Law ( email )
535A Administration
Irvine, CA 92697-1000
United States
Deborah Thorne
Ohio University - Department of Sociology ( email )
Athens, OH 45701-2979
United States
Feedback to SSRN


Paper statistics
Abstract Views: 6,715
Downloads: 599
Download Rank: 22,732
Citations:  9
Footnotes:  266

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.375 seconds