Lawyers Steer Clients Toward Lucrative Filings: Evidence from Consumer Bankruptcies

McIntyre, Frank; Sullivan, Daniel M.; Summers, Laura

doi:10.2139/ssrn.1708111

Cited by 5 publications

(1 citation statement)

References 27 publications

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“…Sullivan, Warren and Westbrook (2003), for example, found that marital status, home ownership, ethnicity, and legal culture were significant factors in Chapter 13 cases as compared to Chapter 7s. Numerous other studies point to legal culture as a significant determinant of Chapter 13 filing: (Bermant, 1999;Lefgren, McIntyre & Miller, 2010;McIntyre, Sullivan and Summers, 2010). Studies in the post-BAPCPA era continue to find that chapter filing choice is driven by sociodemographic and legal culture forces.…”

Section: Resultsmentioning

confidence: 99%

On the Social Costs of Bankruptcy

Hackney

McPherson

Friesner

et al. 2014

International Journal of Social Ecology and Sustainable Development

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The goal of BAPCPA is to shift bankruptcy filers from Chapter 7 to Chapter 13. The basis for this goal is the assumption that Chapter 7 filers repay much less of their debt than do Chapter 13 filers. Therefore, shifting debtors from Chapter 7 to Chapter 13 will increase debt repayment and lessen the amount of bankruptcy costs shifted to society as a whole. In order for this reasoning to be valid, it is necessary to substantiate the claim that Chapter 13 actually leads to substantial debt repayment. This paper examines the validity of this assumption using a random sample of filers from the Eastern Washington U.S. Federal Bankruptcy Court District in 2003 and 2005. The authors find that filers do, indeed, repay a substantial portion of their debts. This suggests that Chapter 13 is effective in generating debt repayment. However, Chapter 13 repayments also create major administrative costs, and frequently provide little benefit to general unsecured creditors. Moreover, the effectiveness of Chapter 13 bankruptcies is substantially reduced (by nearly a 2.5 to 1 ratio) if debtors do not successfully complete the repayment plans. As such, BAPCPA appears to miss an opportunity to further reduce the social costs of bankruptcy.

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Section: Resultsmentioning

confidence: 99%

On the Social Costs of Bankruptcy

Hackney

McPherson

Friesner

et al. 2014

International Journal of Social Ecology and Sustainable Development

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Regional Differences in Chapter 13 Filings: Southern Legal Culture or Religion?

Beck

Hackney

et al. 2013

Review of Social Economy

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What is the actual prevalence of medical bankruptcies?

Hackney

Friesner

Johnson

2016

IJSE

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Purpose Medical bankruptcies occur when an individual experiences an acute or chronic health event, and the costs of care exceed the individual’s ability to pay. In such cases, the individual typically files for bankruptcy. There is an extensive literature that estimates the prevalence of medical bankruptcy, but studies either select a population whose medical care is extremely expensive or chooses ad hoc thresholds for medical bankruptcy categorizations. In both cases, the prevalence of medical bankruptcy is biased. The purpose of this paper is to estimate the actual prevalence of medical bankruptcies in a manner that avoids these limitations. Design/methodology/approach Data are randomly drawn from a single US Bankruptcy Court district. Following the literature, an ad hoc threshold of medical debts which places the bankruptcy filer “at risk” for a medical bankruptcy is postulated. Misclassification analyses are used to estimate the likelihood of a medical bankruptcy filing while adjusting for the use of ad hoc thresholds. Findings The naive prevalence of medical bankruptcy is 23.1 percent, but exceeds 50 percent when accounting for misclassification. Many individuals are “ostensibly” medically bankrupt. They are already seriously indebted, and any outside financial shock, including but not limited to medical bills, can push these debtors into insolvency. Originality/value Bankruptcy is an important social safety net. An improved understanding of the types and magnitudes of medical debts which precipitate a bankruptcy filing can lead to policies that improve outcomes for bankruptcy filers and reduce the social costs of bankruptcy.

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Lawyers Steer Clients Toward Lucrative Filings: Evidence from Consumer Bankruptcies

Cited by 5 publications

References 27 publications

On the Social Costs of Bankruptcy

On the Social Costs of Bankruptcy

Regional Differences in Chapter 13 Filings: Southern Legal Culture or Religion?

What is the actual prevalence of medical bankruptcies?

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