Personal Bankruptcy Research Articles

Factors that Lead Malaysians to File for Personal Bankruptcy

A formal legal statement that one cannot fully repay all of one's debts is required to declare bankruptcy. Since 2000, the number of personal bankruptcies that occur annually in Malaysia has been greater than 10,000. The COVID-19 outbreak that began in early 2020 had a significant negative impact on the economy and the healthcare system as if things were not already terrible enough. As a result, the primary objective of this study was to investigate the statistics covering the period from 1990 to 2020 to determine the factors that lead to personal bankruptcies in Malaysia. In addition, it examined whether or not there was a connection between individual bankruptcies in Malaysia and the country's lending rate, the percentage of loans that were considered to be non-performing, and the unemployment rate. A multivariate regression model was utilized to determine the significance of the relationship between the dependent and independent variables. It was discovered that individual bankruptcies had a significant and inversely proportional relationship with credit and unemployment rates. On the other hand, there was a significant connection between personal bankruptcies and the presence of non-performing loans. Future researchers are strongly encouraged to gather data daily, quarterly, or monthly, incorporate more independent factors in the drivers of personal bankruptcy, and expand their investigations to other countries to obtain more accurate and credible conclusions.

Practice approaches and future trends in the personal bankruptcy system in China

AbstractIn recent years, the need to enact a personal bankruptcy system has become progressively urgent in China. With increased social acceptance, the practice of personal debt solutions in local courts has been booming. The promulgation of the Personal Bankruptcy Ordinance of the Shenzhen Special Economic Zone in 2021 is an important event of epoch‐making significance in China's bankruptcy legislative history. The revision of the Enterprise Bankruptcy Law 2006 has been included in the legislator's working plan. Whether a personal bankruptcy system could be introduced during the revision has become a major focus. The challenges to personal bankruptcy legislation in China include the public concern that debtors abuse the system to evade debts; the judicial pressure caused by too many cases; and the lack of an out‐of‐court mediation mechanism. The personal bankruptcy system is one of the most inconsistent legal fields in the world. China's future personal bankruptcy law will confine its discussion to the subjects of law, bankruptcy discharge period, and regulation of debtors' debt evasion. Legislators should refer to the advanced legislative experience and set up the personal bankruptcy system by combining it with China's national situation.

The Development of Overconfidence: The Effects of Shallow Learning on Overconfidence

Across two studies we investigated the development of confidence and overconfidence in a debtor education course, a mandatory personal bankruptcy class. In study 1, using a nationally representative sample of Americans (n=25,281), those who had recently filed bankruptcy (n=818) performed worse on a financial literacy test yet possessed the highest levels of self-confidence in their financial expertise, compared to others (n=24,463). In study 2 we randomly assigned (n=400) participants to either complete a simulated debtor education course or not. We measured overconfidence in two ways, overestimation (excessive confidence in judgments), and overplacement (ranking oneself relative to others). Before the course participants overestimated and overplaced. Although they learned from the course, their confidence rose at faster rate than actual knowledge, resulting in exacerbated overestimation. The class, however, resulted in lower levels of overplacement. We ruled out that overplacement, but not overestimation, was driven by effects of merely repeating questions multiple times. The effect was especially pronounced in those that started off as top performers. In sum, people approach debtor education overestimating their judgments, and that debtor education results in a spike in overestimation.

What Seems to be the Problem? Ex-Prisoners’ Reentry/Resettlement in the Czech Republic

The study is focused on the reentry/resettlement problems that are faced by ex-prisoners in the Czech Republic (CR). Findings are based on semi-structured interviews with 26 ex-prisoners and 30 social workers who provide social services in prisons and after the release. Based on the data, which were coded inductively employing qualitative content analysis, several post-prison issues emerged: (1) material deprivation and insecurity regarding housing, subsistence, and stable employment; (2) debts and enforcement proceedings; (3) prisonisation effect; (4) health issues; (5) relationships with family and significant others; (6) drug abuse; (7) meaningful leisure time. Particularly, more attention was given to housing, subsistence, stable employment, and debts and enforcement proceedings because, compared to other countries, these issues have their specifics in the CR. Findings, interpreted through the optics of intersectionality, suggest that the Czech social policies regarding ex-prisoners are focused on a one or selection of factors, instead on the complex interplay of them, as well as not properly targeted and delivered in the right time. To improve the situation, the better system of social services financing that would address the ex-prisoners’ complex needs must be implemented along with the housing first policy and more accessible personal bankruptcy.

How does the leniency of personal bankruptcy law affect entrepreneurship in EU countries?

Several studies examined how some characteristics of personal bankruptcy laws influenced entrepreneurial developments during the last two decades. Our main objective is to analyze the association between self-employment and the leniency of the personal bankruptcy systems in 24 EU countries. Unlike previous studies, we measure differences and changes in the leniency of the regulations with a composite index that incorporates 35 variables. Based on a cross-country database of self-employment ratios and various control variables spanning the years 2000 to 2019, we apply a panel regression model. We find that the implementation of new regulations and reforms in personal bankruptcy legislation in more lenient directions positively correlates with entrepreneurial developments measured by self-employment rates. This is more significant in the group of countries where the eligibility criteria for entrepreneurs are not constrained. We find a one-year negative time-lag effect and conclude that strong anticipation of the law for a more lenient system can immediately change the risk-reward profile, and thereby influence entrepreneurship before implementing the actual reform. An important policy implication is that a major reform in regulation or the first implementation of conservative legislation has the same order of magnitude of effect on promoting entrepreneurship as other public policy reforms of similar purpose.

Legislative Construction of the Personal Bankruptcy Exemption System

With the further development of the economy and society, the call to build a personal bankruptcy exemption system is increasingly high. The personal bankruptcy exemption system is an important system for the economic development of modern countries and is of great significance for promoting national economic development. The concept of exemption legislation originates from the theory of debtor cooperation, the modern personal bankruptcy exemption theory is formed after the integration of debt forgiveness theory, humanitarian theory and social utility theory, China's personal bankruptcy exemption theory should be based on modern personal bankruptcy theory, on the basis of modern personal bankruptcy theory combined with China's special cultural customs and economic characteristics to make appropriate adjustments, in order to promote the legislation of China's personal bankruptcy exemption system.

Implementing artificial intelligence in forecasting the risk of personal bankruptcies in Poland and Taiwan

Research background: The global financial crisis from 2007 to 2012, the COVID-19 pandemic, and the current war in Ukraine have dramatically increased the risk of consumer bankruptcies worldwide. All three crises negatively impact the financial situation of households due to increased interest rates, inflation rates, volatile exchange rates, and other significant macroeconomic factors. Financial difficulties may arise when the private person is unable to maintain a habitual standard of living. This means that anyone can become financially vulnerable regardless of wealth or education level. Therefore, forecasting consumer bankruptcy risk has received increasing scientific and public attention. Purpose of the article: This study proposes artificial intelligence solutions to address the increased importance of the personal bankruptcy phenomenon and the growing need for reliable forecasting models. The objective of this paper is to develop six models for forecasting personal bankruptcies in Poland and Taiwan with the use of three soft-computing techniques. Methods: Six models were developed to forecast the risk of insolvency: three for Polish households and three for Taiwanese consumers, using fuzzy sets, genetic algorithms, and artificial neural networks. This research relied on four samples. Two were learning samples (one for each country), and two were testing samples, also one for each country separately. Both testing samples contain 500 bankrupt and 500 nonbankrupt households, while each learning sample consists of 100 insolvent and 100 solvent natural persons. Findings & value added: This study presents a solution for effective bankruptcy risk forecasting by implementing both highly effective and usable methods and proposes a new type of ratios that combine the evaluated consumers? financial and demographic characteristics. The usage of such ratios also improves the versatility of the presented models, as they are not denominated in monetary value or strictly in demographic units. This would be limited to use in only one country but can be widely used in other regions of the world.

“Cuando Colón baje el dedo”: the role of repair in urban reproduction

ABSTRACT In contrast to personal bankruptcy, which provides debt relief without loss of essential life-sustaining properties such as housing, vehicles and basic furnishing, processes of municipal insolvency wield devastating impacts on everyday patterns and properties of social reproduction at the urban level. Part of the municipal debt restructuring process being enacted in Puerto Rico includes the privatization of major public infrastructures, including elements of the water system and the entire electric grid – processes that have impacted personal finances and affected public health outcomes for residents. This paper uses document analysis, participant observation, and the lens of embodiment to examine the relationship between urban forms of social reproduction, repair, and bankruptcy in Puerto Rico, United States. It ultimately reveals two very different imaginaries of Puerto Rican futurity at work: one dominated by the maintenance of colonial debt relations, while a nascent other works to build new spatialities of collective self-determination and social healing.

What Determines Consumer Financial Distress? Place- and Person-Based Factors

Abstract We use credit report data to study consumer financial distress in America. We report large, persistent disparities in financial distress across regions. To understand these patterns, we conduct a “movers” analysis. For collections and default, there is only weak convergence following a move, suggesting these types of distress are not primarily caused by place-based factors (e.g., local economic conditions and state laws) but instead reflect person-based characteristics (e.g., financial literacy and risk preferences). In contrast, for personal bankruptcy, we find a sizable place-based effect, which is consistent with anecdotal evidence on how local legal factors influence personal bankruptcy. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Analysis of the Necessity and Suggestions of the Establishment of Personal Bankruptcy System—Based on the “Individual Bankruptcy Regulations of Shenzhen Special Economic Zone”

Analysis of the Necessity and Suggestions of the Establishment of Personal Bankruptcy System—Based on the “Individual Bankruptcy Regulations of Shenzhen Special Economic Zone”

Governance of College Students’ Online Loan from the Perspective of Personal Bankruptcy Law: Review, Analysis and Approach

Governance of College Students’ Online Loan from the Perspective of Personal Bankruptcy Law: Review, Analysis and Approach

Corrigendum to: Banking Regulatory Constraints and Personal Bankruptcy Filings in the US

Corrigendum to: Banking Regulatory Constraints and Personal Bankruptcy Filings in the US

Building bridges in China for a more harmonious society: Origins and evolution of personal insolvency in Taiwan and Shenzhen

AbstractA much‐heralded new law in Shenzhen, China, is not nearly as new as it might appear. The law's past offers revealing and important lessons for its successful future. Effective from March 2021, the ground‐breaking Shenzhen personal bankruptcy regulation is an impressive monument of Chinese legislation, but, contrary to what has been commonly announced, it is not the first Chinese personal insolvency law. Rather, Shenzhen's statute was founded on, and still reveals vestiges of, a predecessor law with a rich background of informative development. The origin law emerged 13 years earlier across the Strait in Taiwan. Although it was originally based on this Taiwanese law, the Shenzhen successor has powerfully evolved to take into account lessons from earlier struggles in Taiwan and the rest of the world, as catalogued in a landmark report by the World Bank. The Shenzhen model thus embodies an especially elegant product of building bridges from common experience in both East and West leading toward common goals. This article charts the progression of policy choices and results in Taiwan, through the decades of trial and error analyzed in the World Bank report, and culminating in the state‐of‐the‐art new Shenzhen regulation, which is poised for potential rollout to all of Mainland China.

Personal bankruptcy and consumer credit delinquency: The case of personal finance education

Given the increasing complexities of the financial markets as well as a shift away from employer/government sponsored pensions to individuals managing their retirement funds, personal finance education is an important tool in order to navigate the evolving and complex financial environment. In this paper, I examine the impact of personal finance education on credit delinquency. Prior studies show that financial literacy affects financial decisions such as savings, retirement planning, wealth accumulation and stock market participation. Using U.S data on personal bankruptcy and consumer credit delinquency rates, I show that personal finance education is important in reducing personal bankruptcy as well as consumer credit delinquency rates. Furthermore, personal finance education does not appear to moderate the impact of gambling legislation on personal bankruptcy or consumer credit default.

Floridian bankruptcies and local property damage in the United States

PurposeThis study aims to examine the linkage between bankruptcy filings and hurricane events. Several independent variables related to local district court bankruptcy filings are examined. The primary question posed is whether Category 3,4 and 5 hurricanes result in personal bankruptcy filings due to the real property and other damage that ensures.Design/methodology/approachLandfall hurricanes in Florida from 2001 through 2018 were examined by using the fully modified least square regression model. Descriptive statistics include elasticity measures that show statistics prior and post the passage of the Bankruptcy Abuse and Prevent and Consumer Protection Act of 2005 (BAPCPA).FindingsThe elasticity of housing prices was a useful statistic in explaining bankruptcy filings. Regression results indicate that bankruptcy filing occur within one year of a serious hurricane. The regression model found hurricane events and housing price trends were significant variable when predicting district court bankruptcy filings.Practical implicationsBAPCPA targets fraud under Chapter 7 bankruptcy filings. Unfortunately, this also had the unintended consequence of discouraging legitimated filings due to the lowering of the marginal benefit associated with filing when the “means test” is applied.Social implicationsLack of flood insurance coverage and stagnant real estate prices could limit the desirability of filing under Chapter 13 resulting in an inventory of damaged properties being foreclosed.Originality/valuePrior researchers relied on a descriptive approach by using percentage rates to quantify the association between hurricane damage and bankruptcy filings. By using the fully modified regression-based approach, the study herein establishes that filings occur approximately a year after the household experiences the real property loss and identifies other casual factors that influence the decision to file.

PERSONAL BANKRUPTCY IN MALAYSIA AND SINGAPORE: AN EMPIRICAL ANALYSIS

The main objective of this study is to examine the dynamic relationship between personal bankruptcy and Gross Domestic Product (GDP), Consumer Price Index (CPI), Interest Rate (IR), Household Debt (HD), and Unemployment (UE) in Malaysia and Singapore. This study covered time series annual data from 2000 to 2019. ARDL and Variance decompositions were used to test the model. The findings for Malaysia show that CPI and IR are negatively and significantly related to personal bankruptcy in the long run, while HD has a positive relationship. In contrast, CPI shows a positive impact while IR negatively impacts personal bankruptcy in the short run. However, for Singapore, CPI and HD have a negative and positive significant impact on personal bankruptcy, respectively, in the long run. On the other hand, CPI shows a positive and significant relationship with personal bankruptcy in the short run. HD has a positive and significant impact on bankruptcy for both countries. On the other hand, CPI and IR show different impacts on personal bankruptcy in Malaysia and Singapore. The difference in the impact of these macroeconomic variables on bankruptcy in Malaysia and Singapore implies that policies and regulatory reforms to managing personal bankruptcy should be country-specific against the backdrop of different economic environments.

Banking Regulatory Constraints and Personal Bankruptcy Filings in the US

ABSTRACT The economic well-being of a household depends on its access to credit and also its access to a legal system for managing over-indebtedness. Our hypothesis is that the removal of regulatory constraints on a bank’s ability to expand in new geographic markets increases households’ access to credit, which in turn, contributes to a rise in consumer defaults. In the US, we find a net increase in Chapter 13 bankruptcies following a loosening of a state’s restrictions on multi-branch banking, compared to the increase in Chapter 13 bankruptcies in states that did not change their banking rules. The increased mortgage lending after branch deregulation helps explain this rise in Chapter 13 filings, suggesting that homeowners use the Chapter 13 code to save their houses. Further, the effects of the mortgage supply channel are greater in areas with low bank concentration. Overall, our findings are relevant to policymakers in their efforts to either set up a new personal insolvency regime or modify the existing bankruptcy process.

The Determinant Factor of Probability of Individual Bankruptcy: The Case for the Army in Aviation Medical Institute, Subang

The number of bankruptcy cases is rising significantly in Malaysia. According to the Malaysia Department of Insolvency, 2,591 individuals were declared bankrupt in May 2021. The movement towards personal bankruptcy is now one of the government's main concerns. Therefore, this study aims to determine the factors towards the probability of individual bankruptcy; financial planning, rate of income, and attitude towards debts among the army in the Aviation Medical Institute, Subang. The study adopted a cross-sectional design, and 110 questionnaires were distributed to the army in the Aviation Medical Institute, Subang. A simple random sampling technique was employed, and the data gathered were analyzed using mean, multiple regression, and Pearson correlation analysis. The findings indicate a positive relationship between financial planning (r = 0.799, p < 0.000), rate of income (r = 0.780, p < 0.000), and attitude towards debts (r = 0.715, p < 0.000). The multiple regression results have shown that the research model explains that 70 percent of the dependent variable variance and all independent variables except attitude towards debts significantly impact individual bankruptcy probability. The most contributing factor of the probability of individual bankruptcy among the army in the Aviation Medical Institute, Subang were financial planning factors with the value of 0.503 and a significant value of 0.000. To increase awareness of army personnel's financial planning, they must develop a better understanding of financial literacy, develop good attitudes towards spending, and seek financial advisors to guide financing planning. This study's findings are also beneficial for higher education, government, financial and legal institutions, society in general, and the army, especially in the context of consciousness and the cost of financial distress. The information enables everyone to avoid bankruptcy and take necessary precautions or rectification to reduce the number of bankruptcies. Therefore, this study sought to be a centerpiece to help the government authorities develop better support to guide the army to manage their financial planning sustainably.

On Individual Repayment in Personal Bankruptcy

The repayment of debts is the obligation of the debtor, but the repayment of individual debts before bankruptcy may be deemed to be revocable. Its purpose is to protect the debtor from malicious transfer of property in bankruptcy, and avoid the creditor's right to equal compensation due to the debtor's biased liquidation behavior. At the same time, however, some seemingly revocable acts and repayment acts in the danger period can be exempted from revocation. If the debt is repaid, the debtor's property will benefit and the debtor's life will be necessary. The situation that conforms to the basic principles and requirements of the personal bankruptcy legislation system is a supplement to the personal bankruptcy cancellation system, so as to achieve the balance of interests between individual creditors and other creditors who have not yet been repaid, and ensure that all creditors can pay their debts fairly.

Intergenerational Influences on Personal Bankruptcy: Evidence from Singapore

Intergenerational Influences on Personal Bankruptcy: Evidence from Singapore