ABI Journal

The Changing Profile of Chapter 7 Debtors

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Copyright © American Bankruptcy Institute The Changing Profile of Chapter 7 Filers September 2018 BY ED FLYNN I t is not exactly news to the bankruptcy community that filings have fallen sharply in recent years. Total bankruptcy filings in the year ending March 31, 2018, were down by 51 percent from the post-Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) peak of nearly 1.6 million cases, reached in September 2010. The drop in chapter 7 activity is particularly shocking: It is down by 58 percent from the most recent peak. Exhibit 1 shows the annual chapter 7 filings updated each quarter since 2007. Filings rose each quarter from 2007 until late 2010 as a result the impact of the Great Recession and the rebound in filings after hitting post-BAPCPA lows. Since then, chapter 7 filings have plummeted, with most of the decline occurring between 2011-15. This article is an examination of how the profiles of chapter 7 debtors have also changed during this period of continued filing decreases. It is based on review of the more than 650,000 chapter 7 cases that were filed in October during 2007-16. The records come from the Integrated Data Base (IDB), which has been made available by the Federal Judicial Center. 1 The October cases were selected because the IDB shows the status of cases at the end of each fiscal year, and October is the first month of the government's fiscal year. Therefore, all cases were 11-12 months old at the time of examination. By this time, most schedules had been filed, fee-waiver applications had been considered, and most of the cases had already been closed. There are a number of items that are not in the IDB, so some trends cannot be examined over time. The IDB does not provide any information on the family size of chapter 7 debtors, so we cannot determine the total number of debtor-dependents. In addition, the IDB does not have any information on debtor age, gen- der, ethnicity, education or marital status. It also does not have any data on the number of creditors, or the amount of medical debt or student loan debt. Exhibit 2 shows the changing profile over the last decade on certain case characteristics. Joint Filings The percentage of cases that are joint filings (e.g., filed by a husband and wife) have been down sub- stantially in recent years. About one-third of the chapter 7 cases filed from 2008-10 were joint filings. Since 2014, less than one-quarter of chapter 7 filings have been joint cases. As a result, for this sample of cases filed during the month of October, while case filings declined about 60 percent between 2010-16, during the same period the number of chapter 7 debtors declined by about 64 percent. 1 The IDB contains a record for every bankruptcy case filed and closed since 2008. The Federal Judicial Center, in partnership with the Administrative Office of the U.S. Courts, has recently posted this data on its website. This data allows researchers to work with case-level data rather than summary data. The IDB contains a snapshot of cases as of Sept. 30 for every year between filing and closing. See "IDB Bankruptcy 2008-present," Federal Judicial Center, available at www.fjc.gov/research/idb/interactive/IDB-bankruptcy (unless otherwise specified, all links in this article were last visited on July 23, 2018). Coordinating Editor Ed Flynn ABI; Alexandria, Va.

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