credit after bankruptcy

Doug Henwood dhenwood at panix.com
Fri Jan 21 06:40:34 PST 2000


[Someone asked about getting credit after "going chapter" the other day.]

"The Reacquisition of Credit Following Chapter 7 Personal

Bankruptcy"

BY: DAVID K. MUSTO

University of Pennsylvania, Wharton School

Document: Available from the SSRN Electronic Paper Collection:

http://papers.ssrn.com/paper.taf?abstract_id=180431

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http://fic.wharton.upenn.edu/fic/

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Paper ID: Wharton Financial Institutions Center Working Paper

No. 99-22

Date: June 1999

Contact: DAVID K. MUSTO

Email: Mailto:musto at wharton.upenn.edu

Postal: University of Pennsylvania, Wharton School

2258 Steinberg Hall - Dietrich Hall

Philadelphia, PA 19104-6367 USA

Phone: (215)898-3609

Fax: (215)573-2207

Paper Requests:

Please Contact Edward Tatum Mailto:tatum at wharton.upenn.edu

Postal: The Wharton Financial Institutions Center 434 Vance

Hall, Philadelphia, PA 19104-6301. Phone:(215) 573-5838.

Fax:(215)573-8757. Please include Paper ID Number.

ABSTRACT:

Federal law allows credit bureaus to report past bankruptcies up

to ten years, so the financial implication of filing includes a

ten-year influence on new credit. I document this influence with

a large panel database of credit files which tracks many Chapter

7 filers past the moment when the filing disappears from

potential creditors' view, providing a tightly controlled test

of the filing's impact on credit access. The principal finding

is that the bankruptcy flag has a big effect on the access of

the more creditworthy past filers; when they lose their

bankruptcy flags, their credit scores jump substantially and

they open new credit relationships, high-limit bank cards in

particular, quickly. Subsequently, the score-increases mostly

reverse and delinquency is abnormally high.

JEL Classification: G21, G23



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