Conference Agenda

I study how bankruptcy law firm advertisements affect credit recovery of households

in financial distress. Exploiting the border discontinuity strategy associated with the

geographic unit in which local TV advertisements are sold, I empirically uncover

bankruptcy filings and credit recovery related to exogenous variations in bankruptcy

law firm advertisements. I first document a significant advertising effect on filing

rates and show that advertising-induced filers are similar to existing filers. I then find

a positive effect of advertisements on credit outcomes including credit score, new

homeownership, and foreclosure. I interpret these findings as evidence that lawyers

address information frictions in households’ assessment of the bankruptcy option.