Last year I asked who chapter 7 bankruptcy debtors were, and just a few weeks ago, I discovered that Brooklyn bankruptcy filings were up in 2017 over 2016. Because the federal judiciary’s Bankruptcy Abuse Prevention and Consumer Protection report (BAPCPA report) came out recently, it’s fair to ask how 2017 compared to 2016 and whether there’s truth to the trend in more Brooklyn and Long Island bankruptcy cases. Looking at the data is important because doing so can help debtors see what the typical debtor looks like in their districts, in this case the southern (SDNY) and eastern (EDNY) districts of New York.
The answer is that the BAPCPA report does not reflect the rise in bankruptcies that the Statistical Tables for the Federal Judiciary (Statistical Tables) did, which is odd. Rather than painstakingly reproduce some of the tables from the BAPCPA report over two posts, here’s a summary of the notable changes I noticed between the two years.
Starting with Table 1a, which reports debtors’ assets and liabilities, compared to 2016, the total number of cases in the SDNY and the EDNY were about the same. By contrast the Statistical Tables recorded about 500 more chapter 7 cases in the EDNY than in 2016. Partly this may be due to how these reports separate cases. The Statistical Tables focus on all bankruptcy cases, while the BAPCPA reports only provide consumer bankruptcy cases. However, even in the Statistical Tables, the number of nonbusiness filings in the EDNY were up by 500.
Another observation from Table 1a is that in the EDNY debtors reported owing fewer liabilities, meaning the average debtor owed less debt. This could be because some debtors owed much more than the typical debtor did, skewing the average. Even the BAPCPA report notes these effects when discussing a 2016 Washington State debtor who claimed to owe $85 million. Nevertheless, in 2016, EDNY debtors’ net scheduled debt was about $1.5 million, but last year it was $2.9 million.
Table 2a of the BAPCPA Report shows chapter 7 debtors’ incomes and expenses. These figures were almost identical to 2016’s, but under “current monthly income” in the total column, debtors in the SDNY reported 15 percent less total income than two years ago. This suggests that a handful of higher-income debtors filed bankruptcy in 2016. The median current monthly incomes were actually about $100 higher: $3,216 for EDNY and $3,130 for SDNY. This corresponds to annual incomes below $40,000.
Finally, Table 3 lists time intervals from filing to closing for debtors whose cases closed in 2017. These barely budged, and the median New York and Brooklyn bankruptcy takes just over 100 days. Curiously, the percentage of chapter 7 cases that closed in the EDNY fell from 73 percent to 63 percent of the total.
The 2017 BAPCPA Report is here.
The typical chapter 7 debtor does not have a high personal income and does not need to worry about taking the means test. How much debt he or she owes is harder to determine because the BAPCPA Report doesn’t provide median figures, but the average is certainly in the substantial tens of thousands.
Even if your financial situation is not as dire, that doesn’t mean it needs to be before you should consider talking to an experienced New York bankruptcy lawyer.
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.
