Consumer Bankruptcy Pathologies

Forthcoming, Journal of Institutional & Theoretical Economics

Columbia Law and Economics Working Paper No. 550

23 Pages Posted: 29 Sep 2016

Date Written: September 29, 2016


This paper questions several longstanding descriptions of consumer bankruptcy in the United States. We focus on Chapter 13, which discharges debts after consumers pay disposable income to creditors for up to five years. Many studies document pathologies, including high failure rates, racial disparities, low creditor recoveries, and attorney biases. We observe the same patterns in new data drawn from Cook County, Illinois, but show that these pathologies are central tendencies that ignore substantial heterogeneity across consumers. Several are driven by subsets of consumers; some disappear once we account for account for consumer heterogeneity. We present new evidence that some pathologies reflect biases in non-bankruptcy law, not in the bankruptcy process itself.

Keywords: personal bankruptcy, Chapter 13, homeownership, race, attorneys, creditor recoveries

JEL Classification: J22, K35, D14

Suggested Citation

Morrison, Edward R. and Uettwiller, Antoine, Consumer Bankruptcy Pathologies (September 29, 2016). Forthcoming, Journal of Institutional & Theoretical Economics, Columbia Law and Economics Working Paper No. 550, Available at SSRN:

Edward R. Morrison (Contact Author)

Columbia Law School ( email )

435 West 116th Street
New York, NY 10025
United States

Antoine Uettwiller

Columbia Law School ( email )

3022 Broadway
New York, NY 10027
United States

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