Fewer Consumer Bankruptcies, More Repeat Filers in 2014

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By Diane Davis

July 21 — Bankruptcy petitions filed by individuals with consumer debt are down 12 percent when compared to filings in 2013, and there are more repeat filers, according to an annual report released July 21 by the Administrative Office of the U.S. Courts.

The report also found that 34 percent of debtors filed under Chapter 13, up from 32 percent in 2013. Chapter 13 is for individuals with regular income who have debts below a statutory threshold and can make installment payments to creditors under court-confirmed plans, the AOUSC said.

The report includes bankruptcy statistics required to be submitted annually by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and covers debtors with consumer debts seeking relief under Chapters 7, 11, and 13 of the Bankruptcy Code.

Overall Filings Down, Except Ch. 13 

According to the report, 883,930 consumer bankruptcy cases were filed in 2014, down 12 percent from the 1,000,143 bankruptcy petitions filed in 2013.

Approximately 66 percent of the petitions, down from 68 percent in 2013, were filed under Chapter 7, the report said. In Chapter 7 bankruptcy, a debtor's nonexempt assets are liquidated and the proceeds are distributed to creditors, according to the report.

Only Chapter 13 cases filed in 2014 were up by 2 percent from 2013, the report indicated. In 36 percent of the 301,103 Chapter 13 cases filed in 2014, debtors reported that they had filed a bankruptcy petition during the previous eight years.

One-tenth of one percent of petitions filed by individuals with consumer debt were filed under Chapter 11, which is for businesses or individuals whose debts exceed the statutory thresholds for Chapter 13, the report said.

Assets and Liabilities 

According to the report, consumer debtors seeking bankruptcy protection under Chapters 7, 11, or 13 during 2014 reported holding total assets in the aggregate amount of $87 billion, and total liabilities in the aggregate amount of $140 billion. The total assets fell 21 percent below the 2013 amount, and the total liabilities fell 18 percent below comparable data for 2013, the report said.

Seventy-three percent of the assets reported by debtors were real property, and 27 percent personal property, the report said.

“Overall, debtors categorized 93 percent of debts and obligations as dischargeable debt,” according to a summary of the report.

Income and Expenses 

According to the report, the median average monthly income of debtors was $2,616, which is 2 percent lower than in 2013.

The median average reported monthly expenses was $2,600, 3 percent lower than in 2013.

Time Intervals 

A total of 351,960 Chapter 13 consumer cases filed on or after Oct. 17, 2006, were closed by dismissal or plan completion in 2014, the report said. Of these cases, 173,322 cases were dismissed, according to the report.

Other Findings 

Repayment plans were completed in another 178,369 of the cases or 51 percent, which is up from 45 percent in 2013, the report said.

“Nationwide, failure to make plan payments was cited in 54 percent of dismissed cases as the reason for dismissal,” according to the report's summary.

Of the 1,037,603 consumer cases filed on or after Oct. 17, 2006, and terminated in 2014, sanctions under Federal Rule of Bankruptcy Procedure 9011 were imposed against debtors' counsel in 46 cases, with damages totaling $54,000 awarded in 42 cases, the report said.

Attorneys may be sanctioned under Rule 9011 for improper or frivolous representations to the court submitted in any petition, pleading, written motion, or other paper, according to the report.

Caution Regarding Data 

The AOUSC cautioned that the data for many of the tables in the report are provided by debtors when they submit forms, schedules, motions, agreements, and other filings to the court and because they are not validated by the AOUSC, they may be inaccurate.

To contact the reporter on this story: Diane Davis in Washington at ddavis@bna.com

To contact the editor responsible for this story: Jay Horowitz at jhorowitz@bna.com

The AOUSC's report is available at: http://www.uscourts.gov/statistics-reports/bapcpa-report-2014