The Limits of Enhanced Disclosure in Bankruptcy Law: Anticipated and Experienced Emotion

This chapter is a social scientific and psychological analysis of recent bankruptcy policy reforms. The discussion examines the application of bankruptcy policy and its attempt at debt regulation from the perspective of experimental psychology. More specifically, it identifies assumptions in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 that pertain to the Truth in Lending Act's mandated disclosures in credit card contract agreements. The chapter is organized as follows. First, it discusses the recent bankruptcy reform act with an eye toward assumptions about consumer behavior embodied in the law. The second section reviews the findings from work on emotional expectations and the effectiveness of enhanced disclosure that the law anticipates. The third section describes additional data about consumer conduct and experienced emotion. The fourth and final section lays out some additional considerations for future research on emotion and consumer use of credit, especially the role of financial literacy.