Three essays on the effects of the Bankruptcy Abuse Prevention and Consumer Protection Act
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The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) which was passed in 2005 significantly reshaped the bankruptcy laws in the U.S. In this dissertation, using different datasets and estimation methods, I test the effects of the BAPCPA at both the state and individual levels. In chapter 2, I use the difference-in-difference estimation method to estimate the effects of the homestead restrictions and means test mandated under the BAPCPA on chapter composition, using panel data state-level bankruptcy filings, from 1998 to 2007. I find that both the restrictions on the homestead exemption rules and the means test increase the percentage of chapter 13 filings. The results suggest that the BAPCPA discouraged petitioners from moving to states with higher homestead exemption levels. In chapter 3 I introduce a dataset I collected from the petition forms of the bankruptcy cases filed in the northern district of the Georgia bankruptcy court, for the period from 2003 to 2008. I provide a comprehensive description of the underlying data and the creation of the sample of petitioners that is the basis for my analyses of the effects of the BAPCPA in the later chapter. In chapter 4, I examine the effects of the BAPCPA on petitioner behaviors, using the unique dataset introduced in chapter 3 and non-parametric covariate matching estimation. I match the pre-BAPCPA petitioners to the post-BAPCPA petitioners on their personal characteristics and compare their percentages of total debt that is unsecured, percentage of unsecured debt associated with credit cards, monthly income, monthly payments to creditors and their legal costs. For both chapters 7 and 13 petitioners, I find increases on their percentage of total debt that is unsecured and the percentage of unsecured debt that is associated with credit card. In addition, petitioners' monthly income decreased and monthly payments to creditors increased and legal costs of filing also increased after the BAPCPA. The results are consistent with petitioners either increasing their potential dischargeable debt to compensate for the increased costs of filing or avoiding bankruptcy entirely because of the increase in costs. Finally, after the BAPCPA petitioners rely more heavily on bankruptcy lawyers to help to gain larger financial benefits, conditional on filing.