Posts filed under “Think Tank”

How Has the Bankruptcy Act Affected Bankruptcy Filings?

How Has the Bankruptcy Act Affected Bankruptcy Filings?
By Juan M. Sánchez, Senior Economist






It is well known that the number of non-business bankruptcy filings increased dramatically during the ‘80s and ‘90s. This period has been referred to as the “revolution in consumer credit and consumer bankruptcy,”1 as the number of Chapter 7 bankruptcy filings increased more than fivefold from 1983 to 2004. This process, which is associated with the decline in the cost of information,2 ended with the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005. In short, BAPCPA made bankruptcy filings more costly and more limited to low-income households. We focused on the evolution of the number of bankruptcy filings after the BAPCPA.

The figure below presents data on Chapter 7 and Chapter 13 bankruptcy filings for debt associated (predominantly) with non-business activity. Since the most recent information available is for the third quarter of 2014, the chart includes data for the third quarter of every year since 2001.


The figure shows two interesting patterns:

  • Chapter 7 filings increased dramatically in anticipation of BAPCPA.
  • Chapter 7 filings, and to some extent Chapter 13 filings, increased during the recession and have now been declining for four consecutive years.

The fact that bankruptcy filings have been declining while employment has been increasing should not be a surprise, since research has shown that bankruptcy filings follow fluctuations in the labor market quite closely.3

BAPCPA clearly had an impact on the number of bankruptcies being filed. However, the exact impact may not be known for some time, since the recession hit right after the BAPCPA was implemented.

Notes and References

1 Moss, David; and Johnson, Gibbs. “The Rise of Consumer Bankruptcy: Evolution, Revolution, or Both?,” American Bankruptcy Law Journal, Spring 1999, Vol. 73, Issue 2, pp. 311–351.

2 Sánchez, Juan M. “The IT Revolution and the Unsecured Credit Market,” Federal Reserve Bank of St. Louis Working Paper 2010-022B.

3 Athreya, Kartik; Sánchez, Juan M.; Tam, Xuan S.; and Young, Eric R. “Labor Market Upheaval, Default Regulations, and Consumer Debt,” Federal Reserve Bank of St. Louis Working Paper 2014-002C.

Additional Resources

Category: Legal, Think Tank

Sony Hack

Yes, the hack was a criminal attack. But I’d be lying if I didn’t say I’ve been laughing over the revelations, while I’m not crying over the racist comments. The truth is these Hollywood mavens think they’re better than us. And they can’t stop crying about piracy, can’t stop bitching that someone moved their cheese,…Read More

Category: Think Tank, Web/Tech

The synchronized disinflation across Europe since end-2011 raises the question of whether non-euro area EU countries are affected by the undershooting of the euro area inflation target. To shed light on this issue, we estimate an open-economy, New Keynsian Phillips curve, in which we control for imported inflation. Regression results suggest that falling food and…Read More

Category: Think Tank

Torture Architect Torturously Tries to Justify Program

Torture and 9/11 One of the 2 main architects of the American torture program – Air Force psychologist James Mitchell (who personally waterboarded detainees) – still claims that torture produced actionable intelligence: Mitchell, who admitted he is “biased,” said valuable intelligence was obtained, particularly in the case of Abu Zubaydah, who Mitchell said provided interrogators…Read More

Category: Really, really bad calls, Think Tank, War/Defense

BIS: Currency movements drive reserve composition


Category: Currency, Think Tank

Two Sectors & Two Observations

Two Sectors & Two Observations David R. Kotok December 16, 2014     Two Sectors.   As we approach 2015, two standout sectors remain overweight in our US ETF (exchange-traded fund) portfolios. They are the Utilities and the Transportation sectors. Both sectors are largely domestic American businesses. (Most of the companies in the ETFs that…Read More

Category: Think Tank

ADB: Asia and Global Production Networks

Source: ADB: “Asia and Global Production Networks”

Category: Economy, Think Tank

IMF: An Overview of Macroprudential Policy Tools

From IMF: “An Overview of Macroprudential Policy Tools”: Macroprudential policies – caps on loan to value ratios, limits on credit growth and other balance sheets restrictions, (countercyclical) capital and reserve requirements and surcharges, and Pigouvian levies – have become part of the policy paradigm in emerging markets and advanced countries alike. A long-standing puzzle in…Read More

Category: Economy, Think Tank

New Evidence: US Government Intentionally Lied Us Into Iraq War

Alleged Meeting Between 9/11 Hijacker and Iraqi Official Was Debunked by U.S. Intelligence Agencies Before It Was Trumpeted As War Justification … U.S. Pressured Czech Government to Lie There is extensive evidence that the U.S. government intentionally lied us into the Iraq war. Here’s a quick refresher: Pulitzer prize-winning journalist Ron Suskind reported that the…Read More

Category: Think Tank, War/Defense

Transportation Infrastructure Investment

Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of the Federal Highway and Mass Transit Program Transportation Infrastructure Investment: Macroeconomic and Industry Contribution of the Federal Highway and Mass Transit Program from artba

Category: Think Tank, Transports