Small Ball

Abstract

This short article is an online response to Katherine Porter's recent article on chapter 13 consumer bankruptcy, entitled "The Pretend Solution (90 Texas L. Rev. 103). Porter presents new data on the lack of success of chapter 13 plans and calls for radical surgery of the Bankruptcy Code to create a single chapter for consumer bankruptcy. In this short response I endorse this goal, while disparing of its practicality. I suggest more moderate reforms that could be quickly implemented. The response contains a table demonstrating once again that there are extreme variations, by judicial district, in the percentage of consumer bankruptcies that are filed in chapter 13. I argue, as I have in the past, that these variations cannot be explained by consumer preference and must be due in large part to a variety of factors partly under the control of chapter 13 trustees and bankruptcy judges. If these officials would discourage inappropriate filing in chapter 13 by the debtor's attorneys, many of the chapter 13 plans that now fail (as demonstrated by Porter's research) would not be filed and the debtors would be steered into chapter 7, which would better serve their interests.

Keywords: chapter 13, consumer, bankruptcy, empirical

JEL Classification: K12