From Downhill to Slalom: An Empirical Analysis of the Effectiveness of BAPCPA (and Some Unintended Consequences)

Abstract:     
This study represents the first empirical study of the effectiveness and unanticipated consequences of the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA") for the first year in which it has been in effect. BAPCPA was enacted in a politically charged environment after over a decade of lobbying by unsecured creditors who argued that the stigma against filing for bankruptcy protection had decreased and individuals were failing to take personal responsibility for repaying their debts. On the other side, certain academics argued that the cause of increased filings was rather largely a product of social forces beyond a debtor's control. We describe these debates and the empirical evidence previously developed. We then present our study, which attempts to answer many of the important empirical issues raised following the enactment of BAPCPA. Using original databases for the Tenth Circuit, we examine: how the economic profile of debtors has changed; whether unsecured creditors are being repaid a greater percentage of the debt owed to them; and changes in attorneys' fees, attorney numbers, and trustee compensation. In addition, for the first time, two regression models are developed to predict total debt. Finally, and again for the first time, a logistic regression model is developed to predict which debtors will fail to complete their confirmed Chapter 13 plans. This model is then applied to post-BAPCPA data to anticipate failure rates.

Keywords: bankruptcy, empirical legal studies, commercial law, law and society, creditor-debtor law, law and public policy

JEL Classifications: G33

Accepted Paper Series