Bankruptcy, Moral Hazard, and Innovation Marketing

Bankruptcy, Moral Hazard, and Innovation
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Bankruptcy, Moral Hazard, and Innovation
Bankruptcy in the United States is an effective way that debtors can get rid of their debts and acquire a fresh start. The United States has some of the lenient bankruptcy laws towards debtors. However, I think the lenient nature of these bankruptcy laws results in some negatives consequences that affect everyone. Ideally, after bankruptcy, the creditors becomes less likely to extend credit and this can lead to an increase in interest rates (cite). In such situations, the effects of bankruptcy is causing unprecedented consequences for everyone else. While bankruptcy is often viewed as an easy way out, the fact that it affects negatively the financial situation of many other Americans makes it unsuitable (cite).
Further, the lenient nature of the bankruptcy system makes it possible for others to abuse the system. Many people or debtors incu...