An Anatomy of U.S. Personal Bankruptcy Under Chapter 13

40 Pages Posted: 1 Nov 2014

See all articles by Hulya Eraslan

Hulya Eraslan

Rice University

Gizem Kosar

Federal Reserve Banks - Federal Reserve Bank of New York

Wenli Li

Federal Reserve Bank of Philadelphia

Pierre-Daniel G. Sarte

Federal Reserve Bank of Richmond

Multiple version iconThere are 2 versions of this paper

Date Written: October 20, 2014

Abstract

We build a structural model of Chapter 13 bankruptcy that captures salient features of personal bankruptcy under Chapter 13. We estimate our model using a novel data set we construct from bankruptcy court dockets recorded in Delaware between 2001 and 2002. Our estimation results highlight the importance of debtor’s choice of repayment plan length on Chapter 13 outcomes under the restrictions imposed by the bankruptcy law. We use the estimated model to conduct policy experiments to evaluate the impact of more stringent provisions of Chapter 13 that impose additional restrictions on the length of repayment plans. We find that these provisions would not materially affect creditor recovery rates and would not necessarily make discharge more likely for debtors with income above the state median income.

Keywords: Bankruptcy, Repayment

Suggested Citation

Eraslan, Hulya and Kosar, Gizem and Li, Wenli and Sarte, Pierre-Daniel, An Anatomy of U.S. Personal Bankruptcy Under Chapter 13 (October 20, 2014). FRB of Philadelphia Working Paper No. 14-33. Available at SSRN: https://ssrn.com/abstract=2516983 or http://dx.doi.org/10.2139/ssrn.2516983

Hulya Eraslan (Contact Author)

Rice University ( email )

Department of Economics MS-22
Rice University P.O Box 1892
Houston, TX Texas 77251-1892
United States
7133483453 (Phone)

HOME PAGE: http://he6.web.rice.edu/

Gizem Kosar

Federal Reserve Banks - Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States

HOME PAGE: http://https://sites.google.com/site/gizemkosar/

Wenli Li

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Pierre-Daniel Sarte

Federal Reserve Bank of Richmond ( email )

P.O. Box 27622
Richmond, VA 23261
United States

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