Personal Bankruptcy and the Credit Report: Conflicting Mechanisms of Social Mobility

Abstract

ABSTRACT Personal bankruptcy has long been assumed to be a mechanism through which indebted families could achieve a financial fresh start. In sociological terms, bankruptcy, because it allows for the discharge of debt and protection of some assets, insures upward social mobility. For the most part, however, the efficacy of bankruptcy to improve families' socioeconomic status remains untested. Based on interviews with more than 700 people who filed for personal bankruptcy in 2001, it appears that a second mechanism, the credit report, impedes the upward mobility that results from personal bankruptcy.