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Bankrupt in America

A History of Debtors, Their Creditors, and the Law in the Twentieth Century

In 2005, more than two million Americans—six out of every 1,000 people—filed for bankruptcy. Though personal bankruptcy rates have since stabilized, bankruptcy remains an important tool for the relief of financially distressed households. In Bankrupt in America, Mary and Brad Hansen offer a vital perspective on the history of bankruptcy in America, beginning with the first lasting federal bankruptcy law enacted in 1898.

Interweaving careful legal history and rigorous economic analysis, Bankrupt in America is the first work to trace how bankruptcy was transformed from an intermittently used constitutional provision, to an indispensable tool for business, to a central element of the social safety net for ordinary Americans. To do this, the authors track federal bankruptcy law, as well as related state and federal laws, examining the interaction between changes in the laws and changes in how people in each state used the bankruptcy law. In this thorough investigation, Hansen and Hansen reach novel conclusions about the causes and consequences of bankruptcy, adding nuance to the discussion of the relationship between bankruptcy rates and economic performance.

224 pages | 18 line drawings, 8 tables | 6 x 9 | © 2020

Markets and Governments in Economic History

Economics and Business: Economics--History, Economics--Money and Banking


“Each chapter opens with a story that brings the material to life, and the details of the statistical analyses are reserved for the appendix of each chapter, making the book quite readable. Well written and insightful, Bankrupt in America is an excellent resource for readers at all levels.”

Choice Reviews

"[Bankrupt in America] provides a century-long perspective from which to understand present day events and it explains why bankruptcy rates rise and fall over time. . . . As COVID-19 alters economic and financial conditions, this book prepares us to anticipate emergence of the century-old tug-of-war between the pro-creditor and pro-lender narratives. The authors alert us that it may be the predisposition of the politicians in power to believe one of the narratives that could carry the day regarding changes to the bankruptcy laws related to COVID-19, should any be made."

Bankrupt in America is a tour de force analysis of bankruptcy legislation and its impact over the twentieth century. It shows the interplay among state and federal legislation, economic conditions, social stigma, and the role of certain individuals in accounting for changes over time and across states. The authors offer an institutional and cliometric account that deftly draws on economics, history, law and political science. It will become the resource for many scholars, and I hope legislators.”

Lee J. Alston, Indiana University

“Mary and Bradley Hansen have presented us with a superb economic history of personal bankruptcy laws in the United States in the twentieth century. They have collected large quantitative databases and subjected them to careful statistical analysis—cliometricians will applaud—but they have also analyzed the interest-group politics that shaped the bankruptcy laws, and provided us with numerous stories of individuals coping with debt and bankruptcy which make the economic analysis come alive. Bankrupt in America will become a classic—the book that generations of economic historians will cite as the authoritative source. But the book is also timely, as we have come to realize that the social safety net, of which the bankruptcy laws form an important part, has become increasingly frayed.”

Hugh Rockoff, Rutgers University

Bankrupt in America is a wonderful combination of history, institutional analysis, and empirical economics, all in the same book. The book is full of important new insights into twentieth and early twenty-first century American consumer bankruptcy, including the authors’ remarkable discovery that the principal determinants of consumer bankruptcy have often been the supply of consumer credit and the stringency of state garnishment laws, rather than changes in bankruptcy law itself. Bankrupt in America is destined to become an empirically rigorous companion to classics of American consumer finance such as Lendol Calder’s Financing the American Dream.”

David Skeel, University of Pennsylvania

Table of Contents

List of Figures
List of Tables
Preface and Acknowledgments

Chapter 1: Introduction
Appendix to Chapter 1

Chapter 2: The Intended and Unintended Consequences of the 1898 Bankruptcy Act
Appendix to Chapter 2

Chapter 3: An Emphasis on Workout rather than Liquidation
Appendix to Chapter 3

Chapter 4: Personal Bankruptcy after World War II
Appendix to Chapter 4

Chapter 5: The Renegotiation of the Relationship between Consumers and Their Creditors
Appendix to Chapter 5

Chapter 6: The Triumph of the Consumer Creditor
Appendix to Chapter 6

Chapter 7: Conclusion and Epilogue
List of Sources

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