Household Consumption and Personal Bankruptcy
41 Pages Posted: 21 Mar 2008
Date Written: February 2007
This paper utilizes the population of personal bankruptcy filings in the state of Delaware during 2003 and finds that household expenditures on durable consumption goods, such as houses and automobiles, contribute significantly to personal bankruptcy. Medical conditions also lead to personal bankruptcy filings, but other adverse events such as divorce and unemployment have marginal effect. Over-consumption makes households financially over-stretched and more susceptible to adverse events, which reconcile the strategic filing and adverse event explanations.
Keywords: personal bankruptcy, consumption, bankruptcy law reform
JEL Classification: H3, G3, K00
Suggested Citation: Suggested Citation