TY  - JOUR
AU  - White,Michelle J.
TI  - Bankruptcy:  Past Puzzles, Recent Reforms, and the Mortgage Crisis
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14549
PY  - 2008
Y2  - December 2008
UR  - http://www.nber.org/papers/w14549
L1  - http://www.nber.org/papers/w14549.pdf
N1  - Author contact info:
Michelle J. White
Department of Economics
University of California, San Diego
La Jolla, CA  92093-0508
Tel: 858/534-2783
Fax: 858/534-7040
E-Mail: miwhite@ucsd.edu
AB  - This paper discusses four bankruptcy-related policy issues.   First, what is the economic rationale for having a bankruptcy procedure at all and what defines an economically efficient bankruptcy procedure?  Second, why did the number of U.S. bankruptcy filings increase so dramatically between 1980 and 2005?   Third, a major bankruptcy reform went into effect in the U.S. in 2005--what did it do and how did it affect credit and mortgage markets?  Finally, the paper discusses the mortgage crisis, the high social cost of foreclosures, and the difficulty of avoiding foreclosure by voluntarily renegotiation of mortgage contracts, even when such renegotiations are in the joint interest of debtors and creditors.  I also discuss the pros and cons of government programs to refinance mortgages and the possibility of giving bankruptcy judges new power to change the terms of mortgage contracts in bankruptcy.
ER  -