Keywords: Bankruptcy, mortgages, secured credit
Abstract: The recent explosion in personal bankruptcy filings has motivated research
into whether credit markets are being adversely afected 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.
Full paper (485 KB PDF)
| Full paper (691 KB Postscript)
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Last update: March 2, 1998