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Who Are Chapter 7 Bankruptcy Debtors? (Part 2 of 2)

(Click here to read, “Who Are Chapter 7 Bankruptcy Debtors?” part 1.)

In part 1 of this two-post series, I showcased two tables from the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) Report for 2016. The information in the tables can help debtors with consumer debts answer common questions they have about Brooklyn bankruptcy or New York bankruptcy, as well as illustrate what the typical debtor’s circumstances look like. The tables are not very detailed, but with some simple calculations, they provide some factual insight.

In this post, I will turn to the report’s Table 1A, which is titled, “Assets and Liabilities Reported by Debtors and Debts Discharged.” This table gives aggregate dollar figures for all debtors who filed chapter 7 bankruptcy by federal jurisdiction. I’ve modified the table to show the mean averages for debtors with completed schedules.

Circuit and District Cases Assets Liabilities Net Scheduled Debt (in $s)
Total With Complete Schedules Total (in $s) Real Property (in $s) Personal Property (in $s) Total (in $s) Secured Claims (in $s) Unsecured Priority Claims (in $s) Unsecured Nonpriority Claims (in $s)
TOTAL 458,796 430,480 $78,927 $51,248 $27,679 $338,958 $65,376 $9,078 $264,504 $320,343
NY, E 8,087 7,088 $135,390 $110,695 $24,694 $221,141 $136,084 $4,980 $80,077 $209,482
NY, S 5,117 4,738 $99,322 $75,738 $23,584 $180,372 $101,085 $3,966 $75,322 $166,793

Most of these columns are self-explanatory, but the far right column, “Net Scheduled Debt” is equivalent to the amount of debt debtors were able to discharge. Under the “Liabilities” header, “Secured Claims” refers to any debt that is secured by collateral, and “Unsecured Priority Claims” are debts that are either nondischargeable (e.g. child support obligations) or difficult to discharge (tax debts) in chapter 7. “Unsecured Nonpriority Claims” are usually dischargeable. (Click here to read more about what are priority claims.)

As to the chart’s substance, if you’re wondering why debtors in the Eastern and Southern districts owe and discharge so much less debt than the national total, it’s probably because there’s a typo in the data. I traced it to the Western District of Washington in which $85 billion of unsecured debt was discharged. (The next highest district was Central California with only $2 billion.) In 2015, which appears more accurate, the mean debtor’s unsecured nonpriority claims were only $70,100, and the net scheduled debt was only $132,700. This is much more plausible.

One area where the national total, the Eastern District, and the Southern District differ is in real property. New Yorkers typically claim more, especially those in the Eastern District, presumably because of Long Islanders’ wealth. Notably, the mean New Yorker in bankruptcy can exempt all of his or her home equity under the New York exemptions, but this may be an illusion because the information here is based on a calculation, and the BAPCPA Report does not separate no-asset cases from asset cases. Consequently, it’s probable that the typical debtor who owns real estate has a lot more equity than the mean-average debtor.

In terms of liabilities, they appear quite high. Debtors owe more than $50,000 per capita in unsecured debts in all three locations. The amount of net scheduled debt is high as well, but this is probably because it includes mortgage debts that are discharged while the underlying liens on the properties remain in place. Still, the number is surprising: The mean-average debtor’s ratio of unsecured debt to annual income is more than 200 percent. The monthly payment for such that much debt is probably close to $2,000, depending on the interest rate.

The BAPCPA Report contains other tables debtors might be interested in but aren’t really worth displaying here. Creditor misconduct (Table 8A) and sanctions motions against debtors’ attorneys (Table 9A) are very rare. Reaffirmation agreements (Table 4) appear in about 3 percent of Eastern District cases as opposed to 9 percent in the Southern District. Nationally, the rate is 20 percent. New York’s lower figures may due to fewer New Yorkers owning cars, which would be subject to reaffirmation agreements. It’s unclear how frequently courts deny these agreements.

I plan to discuss the BAPCPA Report’s data on other bankruptcy chapters another time. The tables are here.

Overall, the typical chapter 7 New York bankruptcy debtor’s household earns between $30,000 and $40,000 annually, and owes about $70,000 in unsecured debt. The only place where New York debtors differ is in their higher real-estate assets. Finally, New York bankruptcy cases take less time than the national average.

If you are encountering serious financial difficulties—then irrespective of whether you see your situation reflected in these tables—talking to an experienced New York bankruptcy lawyer can help you assess your options. Not every case is average, and many people from all walks of life need bankruptcy relief.

For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced bankruptcy attorney brooklyn ny Bruce Weiner for a free initial consultation.

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/

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