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Who Are Chapter 13 Bankruptcy Debtors?

I recently completed a series of posts providing data on who chapter 7 New York bankruptcy debtors are. The source, the 2016 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) Report, can help answer questions about the characteristics of bankruptcy filings in most chapters, and today I’ll focus on the next most common chapter New Yorkers file in, chapter 13.

As before, I’ll begin with a smaller version of Table 3, which depicts the “Time Intervals From Filing to Closing of Individual Debtors’ Cases” for those ending in 2016. Essentially, it shows how long a typical chapter 13 case takes. The data are for all chapter 13 cases nationwide, those in the Eastern District of New York (Kings (Brooklyn), Richmond (Staten Island), Queens, Nassau, and Suffolk counties), and those in the Southern District of New York (New York County, Bronx County, and six mid-state counties to the north).

Circuit and District Total Chapter 13
Number of Cases Interval in days Number of Cases Interval in days
Mean Median Mean Median
TOTAL 844,549 592 156 338,602 1,162 1,255
NY, E 11,128 253 102 3,018 482 99
NY, S 6,913 392 118 1,439 1,144 989

In contrast to chapter 7 filings, for chapter 13, longer time intervals from filing until case closed is usually better. This is because chapter 13 permits debtors to propose a three-to-five-year repayment plan for their debts. Three years is about 1,095 days, and five years is at least 1,826 days. Looking at Table 3, we see that nationally, chapter 13 cases tend to take longer than three years. In the Southern District of New York, the mean average is about the same, but the median is lower, indicating a different distribution of intervals.

The Eastern District of New York, however, gives inauspicious news for chapter 13. The mean-average case doesn’t last even two years, and half of all chapter 13s barely make it past the three-month mark, much less three years. The numbers are so low that I looked at the 2015 BACPA Report to see if 2016 was an outlier, and it was not. For some reason, many debtors’ chapter 13 cases in the Eastern District do not last long. It’s not obvious from this chart why—perhaps more debtors use chapter 13 to address foreclosure problems—but it may be that some New Yorkers choose chapter 13 when it isn’t appropriate for them.

To explore further, the BAPCPA Report includes Table 6, which gives information on chapter 13 cases that were closed or completed by the end of 2016. I’ve added some percentages to illuminate the data.

Circuit and District Total Cases Closed Cases in Which Plans Completed Cases Dismissed
Total Modifications Made Prior to Plan Completion Total For Failure to Make Payments Under Plan
None One Two Three Four Five or More
TOTAL 345,058 179,614 141,043 26,334 7,877 2,720 1,019 621 165,238 87,652
NY, E 3,048 616 546 59 9 2 0 0 2,422 324
NY, S 1,445 675 669 6 0 0 0 0 766 272
Percent of Total Cases Closed
TOTAL 100.0% 52.1% 40.9% 7.6% 2.3% 0.8% 0.3% 0.2% 47.9% 25.4%
NY, E 100.0% 20.2% 17.9% 1.9% 0.3% 0.1% 0.0% 0.0% 79.5% 10.6%
NY, S 100.0% 46.7% 46.3% 0.4% 0.0% 0.0% 0.0% 0.0% 53.0% 18.8%

Some of the trends in Table 3 appear here as well. For one, plan completion is more common nationally, less so in the Southern District, and much less so in the Eastern District. At the same time, the number of cases dismissed is much higher in the Eastern District. Although, it’s not clear why cases were dismissed, whether they were converted to chapter 7 or resulted in a hardship discharge. What is clear, though, is that Eastern District chapter 13 cases are not closed because debtors missed plan payments. That indicates that either debtors filed chapter 13 with other goals than discharge in mind, or they understood that they were not going to complete their plans and acting accordingly.

Table 7, which I won’t display because it’s so small, shows how many chapter 13 debtors had filed a bankruptcy in any chapter in the previous eight years. It shows that nationally, 38 percent of new chapter 13 debtors had filed in the last eight years, 43 percent did so in the Eastern District, and 31 percent did so in the Southern District. Repeat filing is more common than one might think, but we don’t know much about the debtors’ circumstances.

There are more tables from the BAPCPA Report, which is here, but they can wait for next time. If you are experiencing financial difficulties, talking to an experienced New York bankruptcy lawyer will ensure you file in the chapter that’s best for you. Not everyone who files a short case in chapter 13 does so because it’s the wrong chapter for them.

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

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