Incentives and Bankruptcy Chapter Choice: Evidence from the Reform Act of 1978
AbstractWe ask whether new incentives embedded in a major legal change have their anticipated effect on personal bankruptcy chapter choice. The evidence is based on data at the level of the household shortly before and after enactment of the Bankruptcy Reform Act of 1978. Structural chapter choice models predict a substantial portion of the increase in the proportion of reorganizational filings. Statistical testing confirms a shift in behavior across legal regimes. The sources promoting the increased incidence of reorganizational filings traceable to the law lie in cost effects, changes in eligibility requirements across chapters, differences in categories of dischargeable debt, and increased equity protection. Legal shifts in incentives change behavior but do so substantively only when relatively large amounts of money are at stake. Copyright 1999 by the University of Chicago.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Legal Studies.
Volume (Year): 28 (1999)
Issue (Month): 2 (June)
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Web page: http://www.journals.uchicago.edu/JLS/
Other versions of this item:
- Ian Domowitz & Robert L. Sartain, . "Incentives and Bankruptcy Chapter Choice: Evidence from the Reform Act of 1978," IPR working papers 98-7, Institute for Policy Resarch at Northwestern University.
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- Edward J. Bird & Paul A. Hagstrom & Robert Wild & Janet A. Weiss, 1999. "Credit card debts of the poor: High and rising," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 18(1), pages 125-133.
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