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An anatomy of u.s. Personal bankruptcy under chapter 13

Author

Listed:
  • Hulya Eraslan
  • Gizem Koşar
  • Wenli Li
  • Pierre-Daniel G. Sarte

Abstract

We build a structural model of Chapter 13 bankruptcy that captures salient features of personal bankruptcy under Chapter 13. We estimate our model using a novel data set we construct from bankruptcy court dockets recorded in Delaware between 2001 and 2002. Our estimation results highlight the importance of debtor?s choice of repayment plan length on Chapter 13 outcomes under the restrictions imposed by the bankruptcy law. We use the estimated model to conduct policy experiments to evaluate the impact of more stringent provisions of Chapter 13 that impose additional restrictions on the length of repayment plans. We find that these provisions would not materially affect creditor recovery rates and would not necessarily make discharge more likely for debtors with income above the state median income.

Suggested Citation

  • Hulya Eraslan & Gizem Koşar & Wenli Li & Pierre-Daniel G. Sarte, 2014. "An anatomy of u.s. Personal bankruptcy under chapter 13," Working Papers 14-33, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:14-33
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    References listed on IDEAS

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    Cited by:

    1. Song Han & Geng Li, 2011. "Household Borrowing after Personal Bankruptcy," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 491-517, March.
    2. Albanesi, Stefania & Nosal, Jaromir, 2015. "Insolvency After the 2005 Bankruptcy Reform," CEPR Discussion Papers 10533, C.E.P.R. Discussion Papers.
    3. Daphne Chen & Jake Zhao, 2017. "The Impact of Personal Bankruptcy on Labor Supply Decisions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 26, pages 40-61, October.
    4. Michelle J. White & Ning Zhu, 2010. "Saving Your Home in Chapter 13 Bankruptcy," The Journal of Legal Studies, University of Chicago Press, vol. 39(1), pages 33-61, January.
    5. Sarah W. Carroll & Wenli Li, 2008. "The homeownership experience of households in bankruptcy," Working Papers 08-14, Federal Reserve Bank of Philadelphia.
    6. Wenli Li & Michelle J. White, 2009. "Mortgage Default, Foreclosure, and Bankruptcy," NBER Working Papers 15472, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Bankruptcy; Restrictions; Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA); Means Test;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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