Business Reorganization and Bankruptcy Subpractice Group
214-210-2929
facebook
linkedin
rss
twitter
youtube
google_plus
email
  • Home
    • Bankruptcy Group Home
    • Firm Home (Other Practice Groups)
  • Attorneys
  • Offices
    • Dallas
    • New York
  • Services
  • Industries
  • Bankruptcy News / Blog

The Economist: Bankruptcy and the Economy | A Fresh Start

May 28, 2015
by Richard G. Grant
0 Comment

The Economist reports that the evidence resulting from studies after the passage of BAPCPA indicate that the rules for Chapter 7 debtors might be too strict.

The authors first looked at the effect on consumer bankruptcy filings (see chart).Economist Bankruptcy

Although the change was designed to encourage people to file Chapter 13, paying at least some of their debts, the long term effect was slightly different.

The reform had a big impact. At least at first, Chapter 13 filings rose relative to Chapter 7 ones.

In a new paper, from Stefania Albanesi, of the New York Federal Reserve, and Jaromir Nosal, of Columbia University, finds that the reform led to a permanent drop in the bankruptcy rate.  Will Dobbie of Princeton University and Jae Song, of the Social Security Administration, have made finding that suggests that this is not necessarily a good thing.

Messrs Dobbie and Song argue that tougher laws decrease the debtor’s incentive to work and increase his proclivity to slip out of town, change his job and close down his bank account.

“On average, those granted bankruptcy earned over $6,000 more in the subsequent year than similarly-placed plaintiffs who were rejected. The unlucky ones found it trickier to service their mortgages. Michelle White of the University of California, San Diego and colleagues found that bankruptcy reform caused the default rate on prime mortgages to rise 23%.”

Figures released on March 6th by the Federal Reserve show that consumer debt rose for the 41st straight month (see chart). With inflation low and wages weak, that is worrying. Ms White wants to roll back some of the reform of 2005, making bankruptcy cheaper. Whether that just increases profligacy remains to be seen.

For the original article: Economist: Bankruptcy and the Economy | A Fresh Start

About the Author
Richard G Grant is the Bankruptcy and Chapter 11 Business Reorganization Practice Area Chair of Culhane Meadows, PLLC.
Social Share
  • google-share
Culhane Meadows PLLC \ Business Bankruptcy \ The Economist: Bank…

Bankruptcy Practice Areas:

Company (Debtor) Representation
Secured Creditor Representation
Unsecured Creditor Representation
Creditors' Committee Representation
Landlord Representation
Asset Sales | Purchases
Trustee Representation
Industries
Firm Contact Information
Testimonials
Sitemap

Note:

For nonbankruptcy services including Corporate and Business Services, Intellectual Property, Technology and nonbankruptcy Litigation and Dispute Resolution, please visit the Firm’s Primary Website.

In the News:

Best Lawyers in Dallas 2016 - Bankruptcy
Four Partners Named Among “Best Lawyers in Dallas” by D Magazine | 2016
Aug 17, 2016
Triangle USA Files Chapter 11
Triangle USA Petroleum Corporation Files For Chapter 11 Bankruptcy Protection | June 30, 2016
Jul 07, 2016
Hercules Bankruptcy
Hercules Offshore Files For Chapter 11 Bankruptcy Protection | June 6, 2016
Jul 05, 2016
Supreme Court | Wellness | Stern v. Marshall
Supreme Court Will Review Jevic to Rule on Structured Dismissals and Gift Plans
Jun 29, 2016

Group Contact Information

Richard G. Grant 214-210-2929 rgrant@culhanemeadows.com

Disclaimer:

*For information Technology Law, Culhane Meadows received a Tier 1 ranking in Atlanta, GA and a Tier 3 national ranking. This website and the communications herein may be considered attorney advertising. Previous results are not a guarantee of future outcome. This website is for informational purposes only and does not constitute legal advice. The information herein is not intended to create an attorney-client or similar relationship. Please do not send us unsolicited confidential information. Whether you need legal services and which lawyer or law firm you select are important decisions that should not be based on this website alone.

Contact Us:

Live on Twitter

Tweets by @chapter11dallas

Subscribe to CM Bankruptcy News:

Bankruptcy News:

Best Lawyers in Dallas 2016 - Bankruptcy
Four Partners Named Among “Best Lawyers in Dallas” by D Magazine | 2016
Aug 17, 2016
Triangle USA Files Chapter 11
Triangle USA Petroleum Corporation Files For Chapter 11 Bankruptcy Protection | June 30, 2016
Jul 07, 2016
Hercules Bankruptcy
Hercules Offshore Files For Chapter 11 Bankruptcy Protection | June 6, 2016
Jul 05, 2016
© 2013 – 2016 Richard G. Grant, P.C.
Designated lawyer responsible for this website: Richard G. Grant