The aftermath of bankruptcy; household behavior eventually is relatively unchanged
This recession produced a surge in delinquency rates across all types of loans (see left chart), stressing bank balance sheets. Bankruptcy is designed to give consumers and firms a “fresh start”, and after 9 years the bankruptcy alert is removed from record. A Fed paper, Household Borrowing after Personal Bankruptcy by Song Han and Geng Li, finds that delinquent borrowers revert to their old debtor ways after the 9-year threshold, borrowing more at sometimes higher rates. I wonder, how wil
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Tags: Bank, Bankruptcy, Borrower, Debt, Loan, Personal