Musto, David K2023-05-222023-05-222004-01-012016-05-25https://repository.upenn.edu/handle/20.500.14332/34524Federal law mandates the removal of personal bankruptcies from credit reports after 10 years. The removal’s effect is market efficiency in reverse. The short-term effect is a spurious boost in apparent creditworthiness, especially for the more creditworthy bankrupts, delivering a substantial increase in both credit scores and the number and aggregate limit of bank cards. The longer-term effect is lower scores and higher delinquency than initial full-information scores predict. These findings relate to both the debate over the bankruptcy code and the wisdom of influencing market clearing by removing information.© 2004 by The University of Chicago. The published version is available at: http://www.jstor.org/stable/10.1086/422437.Finance and Financial ManagementArticle