Tag: attorney preference

Law Review: Cohen, Lawless and Shin- Opposite of Correct: Inverted Insider Perceptions of Race and Bankruptcy

Abstract:

Previous data collected during the 2007 meltdown of the subprime mortgage market showed that African Americans were approximately twice as likely to file chapter 13 bankruptcy than persons of other races, a significant policy issue given the generally less generous rules in chapter 13. We first update and replicate these findings with new data collected during 2013 2014 as the housing market recovered. Results of the original study were not specific to the subprime crisis as the new data showed the same 2:1 racial disparity as the older data, suggesting that this disparity may be a relatively enduring part of the U.S.… Read More

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Economics Review: Lusardi, Schneider & Tufano- Financially Fragile Households: Evidence and Implications

Abstract:

This paper examines households’ financial fragility by looking at their capacity to come up with $2,000 in 30 days. Using data from the 2009 TNS Global Economic Crisis survey, we document widespread financial weakness in the United States: Approximately one quarter of Americans report that they would certainly not be able to come up with such funds, and an additional 19% would do so by relying at least in part on pawning or selling possessions or taking payday loans. If we consider the respondents who report being certain or probably not able to cope with an ordinary financial shock of this size, we find that nearly half of Americans are financially fragile.… Read More

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Law Review: Lofgren, McIntyre, & Miller- Chapter 7 or 13: Are Client or Lawyer Interests Paramount?

Abstract:

Households often rely on professionals with specialized knowledge to make important financial decisions. In many cases, the professional’s financial interests are at odds with those of the client. We explore this problem in the context of personal bankruptcy. OLS, fixed effects, and IV estimates all show that attorneys play a central role in determining whether households file under Chapter 7 or Chapter 13 of the bankruptcy code. We present evidence suggesting that some attorneys maximize profits by steering households into Chapter 13 bankruptcy even when the households’ objective financial benefits are low and the probability of case dismissal is high.… Read More

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