Chapter 13 Disbursements in Fiscal Year 2000 Steady Growth

Chapter 13 Disbursements in Fiscal Year 2000 Steady Growth

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In April, we reported on the aspects of stability and growth in chapter 13 disbursements during 1998 and 1999.2 Here we present an update for fiscal year 2000 (FY 2000) in the context of the earlier work.

Filings

For the districts served by the U.S. Trustee Program, the peak in chapter 13 filings occurred in 1998, with just under 367,000 filings.3 The equivalent number for 1999 was 351,708, and for 2000 it was 346,406. From the peak, filings have declined by about 6 percent. The decline occurred generally throughout the nation with a few pockets of exception. There appears to be a more recent reversal toward higher filing numbers, but it is quite modest in chapter 13 compared to the abrupt increase in chapter 7 filings.4

Total Disbursements

The total disbursements made to chapter 13 creditors during each of the past three fiscal years are shown in Table 1. The amount for 2000 represents a 6 percent increase over 1999 and a 19 percent increase over 1998. By 2000, chapter trustees were disbursing almost $3.5 billion annually.

Disbursements to Creditors

During the 1990s, the proportion of total disbursements going to the three major creditor types was remarkably consistent from year to year: Secured creditors received between 53 percent and 58 percent, priority creditors between 9 percent and 12 percent, and unsecured creditors between 18 percent and 22 percent. The numbers and proportions for the last three years are shown in Table 2.

Between 1998 and 2000, payments to secured creditors increased by 15 percent, and payments to general unsecured creditors increased by more than 40 percent. The "Other" category comprises a number of items,5 including the costs of the chapter 13 trustees' operations themselves, which have remained quite constant at between 4.6 percent and 4.7 percent of total disbursements.

Geographical Variation

As shown in Tables 3 and 4, debtors from just a few states contribute the majority of payments to creditors. The six states with the largest disbursements to all creditors remained constant over the three-year period; the amounts are shown in Table 3. The returns to unsecured creditors from those states are also shown in Table 4. The last row in each table shows the percentage of national disbursements contributed by these six states. Each table is sorted according to the size of the disbursement in FY2000.

The contributions of these six states to creditor disbursements is largely, but not completely, a function of their case volumes. Case volumes, in turn, are largely, but not completely, a function of state population. The exception among these states is Tennessee, which is 16th in state population but fourth in chapter 13 filings, behind only Georgia, California and Texas. Yet, as shown, Tennessee consistently leads the nation in total returns to creditors. When ongoing mortgage payments are removed from the "payments to secured creditors" column, Tennessee is no longer number one, but remains in the top five states. It also ranks consistently in the top five in payments to unsecured creditors, again as a function of case volume.6

Disbursements per Case

Table 5 shows estimates of the average amount distributed by each case for the nation as a whole, over the life of the case, for cases in 1998, 1999 and 2000.7 From this, we can see that average disbursements to general unsecured creditors increased by 22 percent, while total disbursements and disbursements to all creditors increased 3 percent and 4 percent, respectively.

When disbursements per case are analyzed for each state, different jurisdictions emerge as national leaders: Michigan, Washington, Oklahoma, Vermont and West Virginia, for example. In our opinion, disbursements per case can and should become a meaningful measure of chapter 13 case administration, once we learn how to correct for the many factors that contribute to the observed differences across jurisdictions.


Footnotes

1 All views expressed in this article are those of the authors and do not necessarily represent the views of the Executive Office for U.S. Trustees or the Department of Justice. Return to article

2 Bermant, Gordon and Flynn, Ed, "Sources of Variability in Chapter 13 Performance," ABI Journal, April 2001, p. 20. Return to article

3 This number does not include filings from Alabama and North Carolina, which are served by the bankruptcy administrators. The peak for the nation as a whole was in 1997, with slightly more than 403,000 filings. The national number for FY2000 is 383,894. Return to article

4 See the most recent filing statistics at www.uscourts.gov. Return to article

5 See Bermant and Flynn, supra note 2, for a complete list of the items in this category. Return to article

6 Data are not available for Alabama and North Carolina. Return to article

7 See www.usdoj.gov/ust for a description of the method used. Return to article

Journal Date: 
Thursday, November 1, 2001