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Abstract
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Before
The consumer bankruptcy system provides significant benefits to high-debt individuals, yet fewer than 2% of US adults file each year. We propose a randomized control trial to answer two questions: (i) which factors are important deterrents to obtaining debt relief through bankruptcy, and (ii) how does bankruptcy impact financial outcomes? We hypothesize that bankruptcy improves financial outcomes and that key barriers include: (a) misperceptions about bankruptcy benefits and (b) fear of credit-score impacts. Testing these hypotheses, we will survey up to 10,000 high-debt individuals. We will elicit perceptions of facts about bankruptcy and provide information about bankruptcy to correct misperceptions. By exogenously shifting beliefs about bankruptcy along dimensions (a) and (b), we will estimate the effect of the information provided on participants’: (i) willingness to consider bankruptcy or pay for bankruptcy information; (ii) initiation of the process of filing for bankruptcy, as measured in a follow-up survey; and (iii) bankruptcy filings, measured by merging credit reports with survey responses. Finally, we measure how exogenous changes in bankruptcy attitudes or filings impact future financial outcomes, measured in merged credit reports.
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After
The consumer bankruptcy system provides significant benefits to high-debt individuals, yet fewer than 2% of US adults file each year. We propose a randomized control trial to answer two questions: (i) which factors are important deterrents to obtaining debt relief through bankruptcy, and (ii) how does bankruptcy impact financial outcomes? We hypothesize that bankruptcy improves financial outcomes and that key barriers include: (a) misperceptions about bankruptcy benefits and (b) fear of credit-score impacts. Testing these hypotheses, we will survey up to 2,500 high-debt individuals. We will elicit perceptions of facts about bankruptcy and provide information about bankruptcy to correct misperceptions. By exogenously shifting beliefs about bankruptcy along dimensions (a) and (b), we will estimate the effect of the information provided on participants’: (i) willingness to consider bankruptcy or pay for bankruptcy information; (ii) initiation of the process of filing for bankruptcy, as measured in a follow-up survey; and (iii) bankruptcy filings, measured by merging credit reports with survey responses. Finally, we measure how exogenous changes in bankruptcy attitudes or filings impact future financial outcomes, measured in merged credit reports.
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Trial End Date
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Before
December 31, 2025
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After
February 25, 2026
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Last Published
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Before
April 25, 2025 03:45 PM
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After
May 29, 2025 10:44 AM
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Intervention End Date
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Before
December 31, 2025
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After
February 25, 2026
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Planned Number of Observations
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Before
Up to 10,000 respondents. Our sample size will be smaller if we exhaust our list of email addresses without reaching 10,000 responses that meet the criteria described above.
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After
Up to 2,500 respondents. Our sample size will be smaller if we exhaust our list of email addresses without reaching 2,500 responses that meet the criteria described above.
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Sample size (or number of clusters) by treatment arms
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Before
Up to 2,500 respondents per treatment arm. Our sample size will be smaller if we exhaust our list of email addresses without reaching 10,000 responses that meet the criteria described above.
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After
Up to 625 respondents per treatment arm. Our sample size will be smaller if we exhaust our list of email addresses without reaching 2,500 responses that meet the criteria described above.
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Power calculation: Minimum Detectable Effect Size for Main Outcomes
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Before
With the maximum sample size of 10,000, we are powered for a minimum detectable effect of 1.9 percentage points on our primary outcome of bankruptcy filing. This represents approximately 33% of our assumed sample mean based on our estimate that 5.7% of individuals with more than $40,000 in non-student, non-mortgage debt file for bankruptcy annually based on the Survey of Consumer Finances.
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After
With the maximum sample size of 2,500, we are powered for a minimum detectable effect of 1.9 percentage points on our primary outcome of bankruptcy filing. This represents approximately 33% of our assumed sample mean based on our estimate that 5.7% of individuals with more than $40,000 in non-student, non-mortgage debt file for bankruptcy annually based on the Survey of Consumer Finances.
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