How Do Consumers Fare When Dealing with Debt Collectors? Evidence from Out-of-Court Settlements

• 成果类型: Article
• 署名作者: Cheng, Ing-Haw; Severino, Felipe; Townsend, Richard R.
• 署名单位: Dartmouth College; University of California System; University of California San Diego
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhaa085
• 发表日期: 2021
• 页码: 1617
• 关键词: MECHANICAL TURK; bankruptcy; variables; outcomes; models; dont

摘要

Do deals with debt collectors alleviate consumer financial distress? Using new data linking court and credit registry records, we examine civil collection lawsuits where consumers can settle out of court. Random assignment of judges with different styles generates exogenous variation in the likelihood of settlement negotiations. We find that settlements increase financial distress relative to going to court, likely by draining consumers of liquidity. The effect is stronger among less financially literate consumers. Survey evidence suggests that consumers generally overestimate how much they would pay through the court system. Perceived nonpecuniary benefits also motivate some consumers to settle.