The Reaquisition of Credit Following Chapter 7 Personal Bankruptcy
AbstractFederal law allows credit bureaus to report past bankruptcies up to ten years, so the financial implication of filing includes a ten-year influence on new credit. I document this influence with a large panel database of credit files which tracks many Chapter 7 filers past the moment when the filing disappears from potential creditors' view, providing a tightly controlled test of the filing's impact on credit access. The principal finding is that the bankruptcy flag has a big effect on the access of the more creditworthy past filers; when they lose their bankruptcy flags, their credit scores jump substantially and they open new credit relationships, high-limit bank cards in particular, quickly. Subsequently, the score-increases mostly reverse and delinquency is abnormally high.
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Bibliographic InfoPaper provided by Wharton School Center for Financial Institutions, University of Pennsylvania in its series Center for Financial Institutions Working Papers with number 99-22.
Date of creation: Jun 1999
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-04-15 (All new papers)
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- Joanna Stavins, 2000. "Credit card borrowing, delinquency, and personal bankruptcy," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 15-30.
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