Credit Supply to Bankrupt Households

Geng Li, Benjamin Keys and Song Han

No 1292, 2010 Meeting Papers from Society for Economic Dynamics

Abstract: Our analysis so far has shown some interesting results. In particular, we find that the supply of unsecured credit to the households who filed for bankruptcy more than two years before is lower than that to the households with similar credit scores but no bankruptcy records on their credit reports. However, households who filed for bankruptcy fewer than two years before received more credit card solicitations than comparable nonfilers with no bankruptcy records. But we also find that the interest rates offered to bankrupt households are in general almost a full percentage point higher than to nonfilers with similar credit scores. These results suggest that lenders may have exploited the legal restrictions on re-filing of personal bankruptcy and have deemed the recent filers as “safer” borrowers.

Date: 2010
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