In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners

American Bankruptcy Law Journal, Vol. 85, No. 3, pp. 291-322, 2011

UNC Legal Studies Research Paper No. 1963244

32 Pages Posted: 23 Nov 2011  

Melissa B. Jacoby

University of North Carolina (UNC) at Chapel Hill - School of Law

Daniel T. McCue

affiliation not provided to SSRN

Eric S. Belsky

Harvard University

Date Written: September 16, 2011

Abstract

We examine the determinants of missed payments and foreclosure initiation among a national sample of homeowners who filed for personal bankruptcy in 2007, using a rich dataset from the 2007 Consumer Bankruptcy Project.

Credit access had a significant effect on keeping mortgages current across all of our models: access to, and reliance on, credit cards reduced the chance of missed payments and default, increasing the likelihood that bankruptcy could produce a fresh start. Missed mortgage payments also were associated with a substantial drop in income and with the use of a mortgage broker. The probability of foreclosure initiation was lower in states with longer foreclosure timelines.

We discuss the implications of our findings for consumer credit regulation, bankruptcy reform, and an integrated view of federal bankruptcy law and state foreclosure law.

Suggested Citation

Jacoby, Melissa B. and McCue, Daniel T. and Belsky, Eric S., In or Out of Mortgage Trouble? A Study of Bankrupt Homeowners (September 16, 2011). American Bankruptcy Law Journal, Vol. 85, No. 3, pp. 291-322, 2011; UNC Legal Studies Research Paper No. 1963244. Available at SSRN: https://ssrn.com/abstract=1963244

Melissa B. Jacoby (Contact Author)

University of North Carolina (UNC) at Chapel Hill - School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States

Daniel T. McCue

affiliation not provided to SSRN ( email )

Eric S. Belsky

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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