Consumption, Debt, and Portfolio Choice: Testing the Effects of Bankruptcy Law

Andreas Lehnert and Dean Maki

Chapter Chapter 4 in Household Credit Usage, 2007, pp 55-76 from Palgrave Macmillan

Abstract: Abstract In the United States, consumer bankruptcy (Chapter 7 and Chapter 13) is designed to provide debtors a fresh start. Broadly speaking, after a household successfully files a bankruptcy petition, its unsecured debts are erased, but it must forfeit any assets above an exemption level determined by law. Laws regulating bankruptcy are a complex mix of state and federal rules. While the specific legal details are beyond the scope of this essay, in general, state laws set the exemption levels above which households forfeit assets; these range from exemptions as low as $75 to more than $100,000 (or, indeed, potentially unlimited levels).1

Keywords: Portfolio Choice; Consumption Growth; Liquid Asset; Income Shock; Consumer Expenditure (search for similar items in EconPapers)
Date: 2007
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DOI: 10.1057/9780230608917_4

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