The Failure of Bankruptcy Reform

This may be of interest.

Heres the paper

Sincerely, Brandon Smietana

[From Rick Marken (2009.12.09.1230)]


On Wed, Dec 9, 2009 at 7:41 AM, Brandon Smietana wrote:

This may be of interest.

I’m not sure I understand this. It looks like passage of the change in the bankruptcy law was associated with a big change in the rate of bankruptcy filings (before and after the change). If I understand the situation correctly, the new law made if harder to file for (or get) Chapter 7 (the no payback bankruptcy). So there was a big increase in filings before the new law passed, probably because most people with debt would probably rather not have to pay it back. There was a big drop in bankruptcies after the law passed, probably because so many people had already filed before the law that there were not too many people available to file right after it passed. So it looks to me like the data suggest that people would rather not pay off their debts (indicated by the acceleration in bankruptcy filings immediately before the change in the law) but when they are too far in debt they will have to file for bankruptcy, regardless of what the law says, as indicated by the return to the nominal rate (~ 125,000 filings/mo) of bankruptcy filings. Is that what this is about?



Richard S. Marken PhD