Personal Bankruptcy and the Accumulation of Shadow Debt

Bronson Argyle (), Benjamin Iverson, Taylor D. Nadauld and Christopher Palmer

No 28901, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Compiling new liability-level data from the balance sheets of personal bankruptcy filers, we document that a sizable share of reported liabilities are “shadow debt,” debt not reported to credit bureaus that often arises from the non-payment of goods and services. We use this new data to evaluate how debtor cash flows affect when consumers file for bankruptcy and how much debt they have at bankruptcy. We find that filers respond to a quasi-exogenous $100 increase in monthly cash flows by delaying filing by an average of one month and by increasing unsecured indebtedness by $4,000 in the months preceding filing. A large share of the additional debt incurred by delaying filers is shadow debt, and our effects are concentrated among filers without employment, health, or marriage shocks.

JEL-codes: G33 G51 K35 (search for similar items in EconPapers)
Date: 2021-06
Note: CF LE PE
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Citations: View citations in EconPapers (2)

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