Bankruptcy exemptions and the market for mortgage loans

Jeremy Berkowitz and Richard Hines

No 1998-07, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The recent explosion in personal bankruptcy filings has motivated research into whether credit markets are being adversely affected by generous legal provisions. Empirically, this question is examined by comparing credit conditions and bankruptcy exemptions across states. We note that the literature has focused on aggregate household credit, making no distinction between secured and unsecured credit. We argue that such aggregation obscures important differences in forms of credit. Most significantly, property exemptions do not prevent the home mortgage lender from foreclosing on the home if not fully repaid.

Keywords: Bankruptcy; Mortgages (search for similar items in EconPapers)
Date: 1998
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