Michelle M. Miller Assistant Professor Rutgers Business School Department of Finance and Economics

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Who Files for Bankruptcy? State Laws and the Characteristics of Bankrupt Households The characteristics of bankrupt households (such as income levels and asset levels) vary widely across states. This paper asks whether these variations can be attributed to state bankruptcy statutes such as property exemption laws or garnishment laws. Using a new household-level dataset, I find that high exemption levels encourage high asset households to file for bankruptcy while high garnishment rates encourage low income households to file. My results support a theoretical model in which households choose between repayment, bankruptcy, and non-response (which occurs when households simply “walk away” from their bills). Although previous theoretical models have ignored non-response, it is, in fact, an important alternative form of “relief” for many households in financial distress.

Social Networks and Personal Bankruptcy While social networks have been examined in the context of many economic decisions, this study is the first to examine the role of social networks in a household’s bankruptcy decision. Networks may affect a household’s bankruptcy decision in many ways: they could provide information about the required paperwork, recommend an attorney, reduce the stigma associated with bankruptcy, or increase awareness of its benefits. Using data from the Panel Study of Income Dynamics (PSID), I exploit county and racial variation to identify network effects --- my empirical strategy asks whether being surrounded by others of the same race increases bankruptcy use more for those in racial groups with high filing rates. This methodology allows me to include both county-year and racial group fixed effects in my regressions. The results strongly confirm the importance of networks in a household’s bankruptcy decision.

Chapter 7 or 13: Are Client or Lawyer Interests Paramount? (with Lars J. Lefgren and Frank McIntyre) B.E. Journal of Economic Analysis and Policy (Advances), 2010 Households often rely on professionals with specialized knowledge to make important financial decisions. In many cases, the professional’s financial interests are at odds with those of the client. We explore this problem in the context of personal bankruptcy. Both OLS and IV estimates show that attorneys play a central role in determining whether households file under Chapter 7 or Chapter 13 of the bankruptcy code. We present evidence suggesting that some attorneys maximize profits by steering households into Chapter 13 bankruptcy even when the households’ objective financial benefits are low and the probability of case dismissal is high. An attorney-induced Chapter 13 filing increases household legal fees and reduces the probability of long-term debt relief.

Repeat Filers under the BAPCPA: A Legal and Economic Analysis (with Lance Miller) Norton Annual Review of Bankruptcy Law, 2008 On April 20, 2005, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the “BAPCPA”). In this paper we highlight the three provisions of the BAPCPA which targeted repeat filers. First, Section 362(c) was amended to limit the automatic stay for repeat cases filed within a year of earlier dismissed cases. In addition, the BAPCPA amended Section 707(a)(8) to increase the time debtors must wait in between discharges, and added Section 109(h) to require that all individual debtors must obtain credit counseling before filing for bankruptcy. We discuss these changes from a legal and historical perspective, and examine whether and how each change impacted repeat filings. We find that while the BAPCPA did increase the time between filings, it did not change the rate of repeat filings. Moreover, the financial description of repeat filers remained the same before and after the BAPCPA. The BAPCPA may have prolonged the inevitable, but it did not lower the rate of repeat filing or effect who repeatedly files for bankruptcy.

Provider Payment Methods and Incentives (with Randall P. Ellis) "Encyclopedia of Public Health” edited by Kris Heggenhougen, 2008 Reprinted in "Health Systems Policy, Finance, and Organization” edited by Guy Carrin, Kent Buse, Kristian Heggenhougen and Stella R. Quah, 2009 Diverse provider payment systems create incentives that affect the quantity and quality of health care services provided. Payments can be based on provider characteristics, which tend to minimize incentives for quality and quantity. Or payments can be based on quantities of services provided and patient characteristics, which provide stronger incentives for quality and quantity. Payments methods using both broader bundles of services and larger numbers of payment categories are growing in prevalence. The recent innovation of performance-based payment attempts to target payments on key patient attributes so as to improve incentives, better manage patients, and control costs.