Document Type

Working Paper

Publication Date

2009

Center/Program

The Charles Evans Gerber Transactional Studies Center

Center/Program

Center for Contract and Economic Organization

Abstract

This Essay considers the significance of credit markets and bankruptcy for life course mobility. Comparing parallel data from the 2007 Survey of Consumer Finances (SCF) and the 2007 Consumer Bankruptcy Project (CBP), it analyzes use of the bankruptcy process as a function of the distribution of unplanned events, the ability of households to use credit markets to limit the adverse effects of such events, and barriers in access to the bankruptcy system. Our findings suggest two things. One, although the financial characteristics of filers vary markedly by age and race, bankrupt households generally come from the bottom quartiles of the population in assets and income and the top quartile in debt. Two, households neither attribute their bankruptcies to the same causes nor use the same strategies to avert bankruptcy. Age- and race-based variations are consistent with disparate racial access to markets and institutions and the increased incidence of financial activity among the elderly.

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