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

41 Pages Posted: 2 Feb 2016 Last revised: 30 Aug 2017

See all articles by Hulya Eraslan

Hulya Eraslan

Rice University

Gizem Koşar

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: 2016-01-01

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 that we construct from bankruptcy court dockets recorded in Delaware in 2001 and 2002. Our estimation results highlight the importance of debtor’s choice of repayment plan length for 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.

Keywords: Chapter 13 bankruptcy, discharge, recovery rate

JEL Classification: C61, D12, K35

Suggested Citation

Eraslan, Hulya and Koşar, Gizem and Li, Wenli and Sarte, Pierre-Daniel, An Anatomy of U.S. Personal Bankruptcy Under Chapter 13 (2016-01-01). FRB of NY Staff Report No. 764. Available at SSRN: https://ssrn.com/abstract=2726511

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 Koşar

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

33 Liberty Street
New York, NY 10045
United States

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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