The Long-Run Effects of Individual Debt Relief

Gustaf Bruze, Alexander Kjær Hilsløv and Jonas Maibom

No 11159, CESifo Working Paper Series from CESifo

Abstract: Individuals with extensive debt may be granted debt relief in court. We provide a comprehensive evaluation of the Danish debt relief program with data from court records linked to nationwide register data. Using event-study methods and quasi-random assignment of applicants to court trustees with varying admission rates, we show that debt relief leads to a large increase in earned income, employment, assets, real estate, secured debt, home ownership, and wealth that persists for more than 25 years after a court ruling. The net transition of workers into employment accounts for two thirds of the increase in earned income.

Keywords: debt relief; personal bankruptcy; household finance (search for similar items in EconPapers)
JEL-codes: D14 D31 K35 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-ure
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Working Paper: The Long-Run Effects of Individual Debt Relief (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11159

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