Working Paper: NBER ID: w28901
Authors: Bronson Argyle; Benjamin Iverson; Taylor D. Nadauld; Christopher Palmer
Abstract: Compiling new liability-level data from the balance sheets of personal bankruptcy filers, we document that a sizable share of reported liabilities are “shadow debt,” debt not reported to credit bureaus that often arises from the non-payment of goods and services. We use this new data to evaluate how debtor cash flows affect when consumers file for bankruptcy and how much debt they have at bankruptcy. We find that filers respond to a quasi-exogenous $100 increase in monthly cash flows by delaying filing by an average of one month and by increasing unsecured indebtedness by $4,000 in the months preceding filing. A large share of the additional debt incurred by delaying filers is shadow debt, and our effects are concentrated among filers without employment, health, or marriage shocks.
Keywords: No keywords provided
JEL Codes: G33; G51; K35
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 100 increase in monthly cash flows (G19) | delay in filing for bankruptcy (K35) |
| delay in filing for bankruptcy (K35) | increase in total indebtedness (F65) |
| delay in filing for bankruptcy (K35) | increase in shadow debt (H69) |
| delay in filing for bankruptcy (K35) | increase in share of total debt that is unsecured (F65) |
| 100 increase in monthly cash flows (G19) | increase in total indebtedness (F65) |
| 100 increase in monthly cash flows (G19) | increase in shadow debt (H69) |
| 100 increase in monthly cash flows (G19) | increase in share of total debt that is unsecured (F65) |