Accounting For The Rise In Consumer Bankruptcies
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| Author | : Igor Livshits |
| Publisher | : |
| Total Pages | : 64 |
| Release | : 2007 |
| Genre | : Business & Economics |
| ISBN | : |
Personal bankruptcies in the United States have increased dramatically, rising from 1.4 per thousand working age population in 1970 to 8.5 in 2002. We use a heterogeneous agent life-cycle model with competitive financial intermediaries who can observe households' earnings, age and current asset holdings to evaluate several commonly offered explanations. We find that increased uncertainty (income shocks, expense uncertainty) cannot quantitatively account for the rise in bankruptcies. Instead, the rise in filings appears to mainly reflect changes in the credit market environment. We find that credit market innovations which cause a decrease in the transactions cost of lending and a decline in the cost of bankruptcy can largely accounting for the rise in consumer bankruptcy. We also argue that the abolition of usury laws and other legal changes are unimportant.
| Author | : Teresa A. Sullivan |
| Publisher | : Beard Books |
| Total Pages | : 392 |
| Release | : 1999 |
| Genre | : Business & Economics |
| ISBN | : 9781893122154 |
Bankruptcy in America is a booming business, with hundreds of thousands of ordinary Americans filing for bankruptcy each year. Is this dramatic growth a result of mushrooming debt or does it reflect a moral decline that permits the middle class to evade their debts? As We Forgive Our Debtors addresses these questions with hard empirical data drawn from bankruptcy court filings. The authors of this multidisciplinary study describe the law and the statistics in clear, nontechnical language, combining a thorough statistical description of the social and economic position of consumer bankrupts with human portraits of the debtors and creditors whose journeys have ended in bankruptcy court. Book jacket.
| Author | : David A. Skeel Jr. |
| Publisher | : Princeton University Press |
| Total Pages | : 296 |
| Release | : 2014-04-24 |
| Genre | : Business & Economics |
| ISBN | : 1400828503 |
Bankruptcy in America, in stark contrast to its status in most other countries, typically signifies not a debtor's last gasp but an opportunity to catch one's breath and recoup. Why has the nation's legal system evolved to allow both corporate and individual debtors greater control over their fate than imaginable elsewhere? Masterfully probing the political dynamics behind this question, David Skeel here provides the first complete account of the remarkable journey American bankruptcy law has taken from its beginnings in 1800, when Congress lifted the country's first bankruptcy code right out of English law, to the present day. Skeel shows that the confluence of three forces that emerged over many years--an organized creditor lobby, pro-debtor ideological currents, and an increasingly powerful bankruptcy bar--explains the distinctive contours of American bankruptcy law. Their interplay, he argues in clear, inviting prose, has seen efforts to legislate bankruptcy become a compelling battle royale between bankers and lawyers--one in which the bankers recently seem to have gained the upper hand. Skeel demonstrates, for example, that a fiercely divided bankruptcy commission and the 1994 Republican takeover of Congress have yielded the recent, ideologically charged battles over consumer bankruptcy. The uniqueness of American bankruptcy has often been noted, but it has never been explained. As different as twenty-first century America is from the horse-and-buggy era origins of our bankruptcy laws, Skeel shows that the same political factors continue to shape our unique response to financial distress.
| Author | : Mary Eschelbach Hansen |
| Publisher | : University of Chicago Press |
| Total Pages | : 237 |
| Release | : 2020-02-05 |
| Genre | : Business & Economics |
| ISBN | : 022667973X |
In 2005, more than two million Americans—six out of every 1,000 people—filed for bankruptcy. Though personal bankruptcy rates have since stabilized, bankruptcy remains an important tool for the relief of financially distressed households. In Bankrupt in America, Mary and Brad Hansen offer a vital perspective on the history of bankruptcy in America, beginning with the first lasting federal bankruptcy law enacted in 1898. Interweaving careful legal history and rigorous economic analysis, Bankrupt in America is the first work to trace how bankruptcy was transformed from an intermittently used constitutional provision, to an indispensable tool for business, to a central element of the social safety net for ordinary Americans. To do this, the authors track federal bankruptcy law, as well as related state and federal laws, examining the interaction between changes in the laws and changes in how people in each state used the bankruptcy law. In this thorough investigation, Hansen and Hansen reach novel conclusions about the causes and consequences of bankruptcy, adding nuance to the discussion of the relationship between bankruptcy rates and economic performance.
| Author | : Teresa A. Sullivan |
| Publisher | : Yale University Press |
| Total Pages | : 405 |
| Release | : 2020-02-18 |
| Genre | : Business & Economics |
| ISBN | : 0300251890 |
Why have so many middle-class Americans encountered so much financial trouble? In this classic analysis of hard-pressed families, the authors discover that financial stability for many middle-class Americans is all too fragile. The authors consider the changing cultural and economic factors that threaten financial security and what they imply for the future vitality of the middle class. A new preface examines the persistent and new threats that have emerged since the original publication. "[A] fascinating, alarming study. . . . [This] chilling diagnosis of middle-class affliction demonstrates that we all may be only a job loss, medical problem or credit card indulgence away from the downward spiral leading to bankruptcy."--Publishers Weekly "A well-designed and carefully executed study."--Andrew Greeley, University of Chicago "The Fragile Middle Class, a well-written work of social science that is about as gripping as the genre gets, forces us to reevaluate notions about consumerism."--American Prospect
| Author | : Katherine Porter |
| Publisher | : Stanford University Press |
| Total Pages | : 322 |
| Release | : 2012-01-11 |
| Genre | : Social Science |
| ISBN | : 0804780587 |
About 1.5 million households filed bankruptcy in the last year, making bankruptcy as common as college graduation and divorce. The recession has pushed more and more families into financial collapse—with unemployment, declines in retirement wealth, and falling house values destabilizing the American middle class. Broke explores the consequences of this unprecedented growth in consumer debt and shows how excessive borrowing undermines the prosperity of middle class America. While the recession that began in mid-2007 has widened the scope of the financial pain caused by overindebtedness, the problem predated that large-scale economic meltdown. And by all indicators, consumer debt will be a defining feature of middle-class families for years to come. The staples of middle-class life—going to college, buying a house, starting a small business—carry with them more financial risk than ever before, requiring more borrowing and new riskier forms of borrowing. This book reveals the people behind the statistics, looking closely at how people get to the point of serious financial distress, the hardships of dealing with overwhelming debt, and the difficulty of righting one's financial life. In telling the stories of financial failures, this book exposes an all-too-real part of middle-class life that is often lost in the success stories that dominate the American economic narrative. Authored by experts in several disciplines, including economics, law, political science, psychology, and sociology, Broke presents analyses from an original, proprietary data set of unprecedented scope and detail, the 2007 Consumer Bankruptcy Project. Topics include class status, home ownership, educational attainment, impacts of self-employment, gender differences, economic security, and the emotional costs of bankruptcy. The book makes judicious use of illustrations to present key findings and concludes with a discussion of the implications of the data for contemporary policy debates.
| Author | : M. Ayhan Kose |
| Publisher | : World Bank Publications |
| Total Pages | : 403 |
| Release | : 2021-03-03 |
| Genre | : Business & Economics |
| ISBN | : 1464815453 |
The global economy has experienced four waves of rapid debt accumulation over the past 50 years. The first three debt waves ended with financial crises in many emerging market and developing economies. During the current wave, which started in 2010, the increase in debt in these economies has already been larger, faster, and broader-based than in the previous three waves. Current low interest rates mitigate some of the risks associated with high debt. However, emerging market and developing economies are also confronted by weak growth prospects, mounting vulnerabilities, and elevated global risks. A menu of policy options is available to reduce the likelihood that the current debt wave will end in crisis and, if crises do take place, will alleviate their impact.
| Author | : Thomas A. Durkin |
| Publisher | : Oxford University Press |
| Total Pages | : 737 |
| Release | : 2014-07-16 |
| Genre | : Business & Economics |
| ISBN | : 0199384967 |
Consumer Credit and the American Economy examines the economics, behavioral science, sociology, history, institutions, law, and regulation of consumer credit in the United States. After discussing the origins and various kinds of consumer credit available in today's marketplace, this book reviews at some length the long run growth of consumer credit to explore the widely held belief that somehow consumer credit has risen "too fast for too long." It then turns to demand and supply with chapters discussing neoclassical theories of demand, new behavioral economics, and evidence on production costs and why consumer credit might seem expensive compared to some other kinds of credit like government finance. This discussion includes review of the economics of risk management and funding sources, as well discussion of the economic theory of why some people might be limited in their credit search, the phenomenon of credit rationing. This examination includes review of issues of risk management through mathematical methods of borrower screening known as credit scoring and financial market sources of funding for offerings of consumer credit. The book then discusses technological change in credit granting. It examines how modern automated information systems called credit reporting agencies, or more popularly "credit bureaus," reduce the costs of information acquisition and permit greater credit availability at less cost. This discussion is followed by examination of the logical offspring of technology, the ubiquitous credit card that permits consumers access to both payments and credit services worldwide virtually instantly. After a chapter on institutions that have arisen to supply credit to individuals for whom mainstream credit is often unavailable, including "payday loans" and other small dollar sources of loans, discussion turns to legal structure and the regulation of consumer credit. There are separate chapters on the theories behind the two main thrusts of federal regulation to this point, fairness for all and financial disclosure. Following these chapters, there is another on state regulation that has long focused on marketplace access and pricing. Before a final concluding chapter, another chapter focuses on two noncredit marketplace products that are closely related to credit. The first of them, debt protection including credit insurance and other forms of credit protection, is economically a complement. The second product, consumer leasing, is a substitute for credit use in many situations, especially involving acquisition of automobiles. This chapter is followed by a full review of consumer bankruptcy, what happens in the worst of cases when consumers find themselves unable to repay their loans. Because of the importance of consumer credit in consumers' financial affairs, the intended audience includes anyone interested in these issues, not only specialists who spend much of their time focused on them. For this reason, the authors have carefully avoided academic jargon and the mathematics that is the modern language of economics. It also examines the psychological, sociological, historical, and especially legal traditions that go into fully understanding what has led to the demand for consumer credit and to what the markets and institutions that provide these products have become today.
| Author | : Thomas A. Durkin |
| Publisher | : |
| Total Pages | : 737 |
| Release | : 2014 |
| Genre | : Business & Economics |
| ISBN | : 0195169921 |
Consumer Credit and the American Economy examines the economics, behavioral science, sociology, history, institutions, law, and regulation of consumer credit in the United States. After discussing the origins and various kinds of consumer credit available in today's marketplace, this book reviews at some length the long run growth of consumer credit to explore the widely held belief that somehow consumer credit has risen "too fast for too long." It then turns to demand and supply with chapters discussing neoclassical theories of demand, new behavioral economics, and evidence on production costs and why consumer credit might seem expensive compared to some other kinds of credit like government finance. This discussion includes review of the economics of risk management and funding sources, as well discussion of the economic theory of why some people might be limited in their credit search, the phenomenon of credit rationing. This examination includes review of issues of risk management through mathematical methods of borrower screening known as credit scoring and financial market sources of funding for offerings of consumer credit. The book then discusses technological change in credit granting. It examines how modern automated information systems called credit reporting agencies, or more popularly "credit bureaus," reduce the costs of information acquisition and permit greater credit availability at less cost. This discussion is followed by examination of the logical offspring of technology, the ubiquitous credit card that permits consumers access to both payments and credit services worldwide virtually instantly. After a chapter on institutions that have arisen to supply credit to individuals for whom mainstream credit is often unavailable, including "payday loans" and other small dollar sources of loans, discussion turns to legal structure and the regulation of consumer credit. There are separate chapters on the theories behind the two main thrusts of federal regulation to this point, fairness for all and financial disclosure. Following these chapters, there is another on state regulation that has long focused on marketplace access and pricing. Before a final concluding chapter, another chapter focuses on two noncredit marketplace products that are closely related to credit. The first of them, debt protection including credit insurance and other forms of credit protection, is economically a complement. The second product, consumer leasing, is a substitute for credit use in many situations, especially involving acquisition of automobiles. This chapter is followed by a full review of consumer bankruptcy, what happens in the worst of cases when consumers find themselves unable to repay their loans. Because of the importance of consumer credit in consumers' financial affairs, the intended audience includes anyone interested in these issues, not only specialists who spend much of their time focused on them. For this reason, the authors have carefully avoided academic jargon and the mathematics that is the modern language of economics. It also examines the psychological, sociological, historical, and especially legal traditions that go into fully understanding what has led to the demand for consumer credit and to what the markets and institutions that provide these products have become today.
| Author | : Jason J. Kilborn |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2007 |
| Genre | : Bankruptcy |
| ISBN | : 9781594601477 |
This book explores the rapidly evolving law of individual insolvency. As consumer borrowing and spending play a greater and greater role in fueling worldwide economic growth, more and more countries are dealing with the casualties of the "democratization of credit" and the "open credit economy." This book explores the struggles that led to the implementation and continuous revision of consumer insolvency law throughout much of Europe in the 1990s and early 2000s. Drawing on both primary sources of formal law and empirical studies of the law in action, this book offers an overview of how the law of consumer "overindebtedness" has played out in the last two decades in the United States and Europe and where it appears to be headed today. While the focus here is on law and practice, the questions for discussion at the end of each chapter might spawn deeper theoretical and policy explorations of the ambivalent relationship of societies to their financially overextended consumers and the ambiguous state of contract law in the consumer context in the 21st century. Chapter 1 sets the stage by introducing the challenges and methodology of a comparative approach to this area of the law. Chapter 2 explores the varying form and role of "credit counseling" and pre-bankruptcy negotiation with creditors in the various systems presented. Chapters 3 and 4 compare and contrast the form and function of the formal consumer insolvency systems in the United States, France, Germany, Austria, England & Wales, the Netherlands, Sweden, Belgium, and Luxembourg. This book is designed for use either in a comparative law course, using consumer insolvency systems to illustrate many of the challenges of comparative law analysis, or in a basic bankruptcy course, using a variety of European approaches and their development over time to enlighten and challenge students' appreciation of the operation of the U.S. system. This book is part of the Comparative Law Series, edited by Michael L. Corrado, Arch T. Allen Distinguished Professor of Law, UNC School of Law. "Each chapter is punctuated with thoughtful discussion questions that will spark debate about the merits of various countries' solutions to the problem of consumer debt." -- Harvard Law Review "Throughout the book Kilborn employs the welcoming tone of a seasoned and passionate educator, with a touch of humor, at the same time appealing to the sense of certainty that law students so often crave...Kilborn is to be congratulated." -- The Law and Politics Book Review
