Households Debt Restructuring: The Re-default Effects of a Debt Suspension
Journal of Law, Economics, and Organization, 2017, vol. 33, issue 4, 686-717
When facing financial distress, French households can file a case to a “households’ over-indebtedness commission” (HDC). The HDC can order an immediate repayment or grant a debt suspension. Exploiting the random assignment of bankruptcy filings to managers, we show that a debt suspension has a very significant and negative effect on the likelihood to re-default but that this impact is only short-lived. The effect depends not only on the characteristics of the households but also on the nature of their indebtedness. Our results imply that rather than focusing on a specific debt profile, above all a deeper restructuring of the expenditure side is necessary to make the plan sustainable in case of an uniform increase of the HDC severity. They also single out specific banks lending to particular fragile households. They indicate the importance of policy actions on budget counseling, as well as the importance of regulation of credit distribution to avoid both entering into bankruptcy and re-filing for bankruptcy.
JEL-codes: D14 K35 G28 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Working Paper: Household Debt Restructuring: The Re-default Effects of Debt Suspensions (2017)
Working Paper: Households Debt Restructuring: The Re-default Effect of a Debt Suspension (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:oup:jleorg:v:33:y:2017:i:4:p:686-717.
Ordering information: This journal article can be ordered from
Access Statistics for this article
Journal of Law, Economics, and Organization is currently edited by Pablo T. Spiller
More articles in Journal of Law, Economics, and Organization from Oxford University Press Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK.
Bibliographic data for series maintained by Oxford University Press ().