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http://ssrn.com/abstract=944916
 
 

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Abuse or Protection?


Michelle J. White


University of California, San Diego (UCSD) - Department of Economics; National Bureau of Economic Research (NBER)


Regulation, Vol. 29, No. 3, pp. 28-35, Fall 2006

Abstract:     
Bankruptcy policy balances conflicting objectives of providing consumption insurance to debtors and protecting creditors. The adoption of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act shifted the balance toward creditors by raising debtors' cost of filing for bankruptcy and reducing the amount of debt that is discharged in bankruptcy. The changes will have little effect on "opportunistic" debtors, who can still use pre-bankruptcy planning shelter substantial assets in bankruptcy. But the changes are likely to harm many non-opportunistic debtors - the people whom bankruptcy law is intended to help - simply because they cannot afford the high cost of filing. A better policy approach would be to require debtors to use of portion of both their wealth and future income to make payments on their debt, which would protect non-opportunistic debtors while deterring opportunism.

Number of Pages in PDF File: 8

Keywords: bankruptcy law, BAPCPA, debtor, creditor, consumption insurance, credit availability, bankruptcy, opportunistic debtors, non-opportunists

JEL Classification: D78, H26, H29, I30, K39, K41, L51

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Date posted: November 15, 2006  

Suggested Citation

White, Michelle J., Abuse or Protection?. Regulation, Vol. 29, No. 3, pp. 28-35, Fall 2006. Available at SSRN: http://ssrn.com/abstract=944916

Contact Information

Michelle J. White (Contact Author)
University of California, San Diego (UCSD) - Department of Economics ( email )
9500 Gilman Drive
La Jolla, CA 92093-0508
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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