Household Debt Restructuring: The Re-default Effects of Debt Suspensions
Débats économiques et financiers from Banque de France
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. Five years after the decision—conditionally on not having previously re-defaulted—the probability of re-default is the same whether or not the household benefits from the grace period.
Keywords: Bankruptcy; Household Finance; Default; Debt Restructuring. (search for similar items in EconPapers)
JEL-codes: G2 K35 (search for similar items in EconPapers)
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Journal Article: Households Debt Restructuring: The Re-default Effects of a Debt Suspension (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:decfin:29
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