Optimizing Consumer Credit Markets and Bankruptcy Policy

37 Pages Posted: 13 Sep 2005

See all articles by Ronald J. Mann

Ronald J. Mann

Columbia University - Law School

Date Written: September 2006

Abstract

This article explores the relationship between consumer credit markets and bankruptcy policy. In general, I argue that the causative relationships running between borrowing and bankruptcy compel a new strategy for policing the conduct of lenders and borrowers in modern consumer credit markets. The strategy must be sensitive to the role of the credit card in lending markets and must recognize that both issuers and cardholders are well placed to respond to the increased levels of spending and indebtedness. In the latter parts of the article, I recommend mandatory minimum payment requirements, a tax on distressed credit card debt, and the subordination of payments to credit card lenders in bankruptcy. I also argue that many aspects of the American bankruptcy system, as recently reformed, are overly protective of credit card issuers.

Keywords: Consumer credit, credit cards, bankruptcy, usury

JEL Classification: K29

Suggested Citation

Mann, Ronald J., Optimizing Consumer Credit Markets and Bankruptcy Policy (September 2006). U of Texas law, Law and Econ Research Paper No. 59, Available at SSRN: https://ssrn.com/abstract=802825 or http://dx.doi.org/10.2139/ssrn.802825

Ronald J. Mann (Contact Author)

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

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