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Consumer Bankruptcy: How Unsecured Lenders Fare

14 Pages Posted: 29 Aug 2006  

Mark J. Furletti

Federal Reserve Bank of Philadelphia

Date Written: November 2003


On September 8, 2003, the Payment Cards Center of the Federal Reserve Bank of Philadelphia hosted a workshop on consumer bankruptcy and its effect on unsecured lenders. Professor Melissa Jacoby of Temple University's School of Law led the workshop. A leading bankruptcy scholar, Jacoby described the current bankruptcy system and the potential impact of Chapter 7 reforms on the rights of unsecured creditors. This paper summarizes Jacoby's presentation and the ensuing discussion. It offers a brief overview of consumer bankruptcy and the rights of unsecured creditors that lend money to individuals who ultimately file for bankruptcy. It also discusses the proposed amendments to the bankruptcy code being debated in Congress. Finally, the paper concludes with Jacoby's assessment of how unsecured lenders, such as credit card issuers, would likely be treated in the proposed system.

Keywords: Bankruptcy

Suggested Citation

Furletti, Mark J., Consumer Bankruptcy: How Unsecured Lenders Fare (November 2003). Federal Reserve Bank of Philla Payment Cards Center Discussion Paper No. 03-17. Available at SSRN: or

Mark J. Furletti (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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