Saving your home in Chapter 13 bankruptcy
By: Michelle J. White, Ning Zhu.
Contributors: Zhu, Ning.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 14179; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 14179.
Publisher: National Bureau of Economic Research
Published: 2008
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "This paper examines how filing for bankruptcy under Chapter 13 helps financially distressed debtors save their homes.  Filing under Chapter 13 stops lenders from foreclosing and gives debtors extra time to repay mortgage arrears, but does not reduce the total amount owed.  We develop a model of debtors' decisions to default on their mortgages and file for bankruptcy and we evaluate it using a new dataset of debtors who filed for bankruptcy under Chapter 13 in 2006.  We also examine the effect of allowing "strip-down" of residential mortgages in Chapter 13, so that bankruptcy judges could reduce the total amount owed.  The paper documents that 96% of Chapter 13 filers are homeowners and that more than 90% of Chapter 13 plans involve repayment of mortgages or car loans.  The model predicts that introducing strip-down would allow an additional 100,000 debtors to save their homes each year"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 7/23/2008.

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