Barriers to Bankruptcy Relief

The consumer bankruptcy system provides significant benefits to high-debt individuals, yet fewer than 1% of US adults file each year. We will run a randomized control trial to estimate the extent to which a lack of information about (1) asset exemptions and the dischargeability of debt and (2) the credit market consequences of filing for bankruptcy prevents debtors from filing. We will invite a large of number of prospective bankruptcy candidates to complete a survey in which we will elicit their understanding of the bankruptcy system and provide information treatments on (1), (2), and both to correct misperceptions about bankruptcy. As outcomes, we will measure their interest in filing for bankruptcy, initiation of the process of filing for bankruptcy in a follow-up survey, and credit report outcomes linked to survey responses.