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Household Debt Restructuring: The Re-default Effects of Debt Suspensions

Henri Fraisse

Débats économiques et financiers from Banque de France

Abstract: 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)
Pages: 61 pages
Date: 2017
New Economics Papers: this item is included in nep-law
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