Chapter 13 Study Finds that Two-Thirds of Debtors Did Not Complete Repayment Plans Little Paid to Unsecured Creditors

Chapter 13 Study Finds that Two-Thirds of Debtors Did Not Complete Repayment Plans Little Paid to Unsecured Creditors

Contact: John Hartgen
             (703) 739-0800
[email protected]



February 26, 2007, Alexandria, Va. — A recent study funded by a grant from the American Bankruptcy Institute examining chapter 13 filings found that two-thirds of debtors did not complete a repayment plan or receive a discharge, and that of the one-third who did attain a discharge, 15 percent later returned to bankruptcy. The Chapter 13 Project also found that secured creditors received more than two-thirds of debtors’ payments and that unsecured creditors received less than a third, with the median unsecured creditor repayment standing at $0. The study’s findings are summarized in the March edition of the ABI Journal in an article written by the Chapter 13 Project’s lead researcher, Prof. Scott F. Norberg of Florida International University’s College of Law.


The Chapter 13 Project looked at 795 chapter 13 cases from 1994-2003 in seven federal judicial districts to determine if the chapter 13 process fulfilled two of its principal purposes: giving debtors a fresh start and providing for creditor repayment. While the study looked at cases filed prior to the implementation of the Bankruptcy Abuse Prevention and Consumer Protection act of 2005 (BAPCPA), Prof. Norberg notes that researchers expected that the findings will help provide a baseline for measuring the BAPCPA’s effect on chapter 13 case outcomes.


The study found that at least half of all the chapter 13 filers in the sample had filed one or more bankruptcy cases in addition to the sample case. The Project’s researchers anticipated that BAPCPA’s limitations on the automatic stay where the debtor has filed one or more cases in the year preceding the current filing would substantially reduce the numbers of chapter 13 filings and increase the percentage of completed cases.


The researchers also predicted that BAPCPA’s provisions will have the effect of further diminishing unsecured creditor collections in chapter 13, while increasing the costs of those collections. The diminished collections by unsecured creditors would likely be due to the provisions enhancing the repayment rights of secured creditors, such as the new restrictions on the automatic stay to allow some creditors to retake collateral when the debtor has equity in it (e.g., a car purchased within 910 days of filing).


Debtors examined in the case study were nearly evenly divided between men and women. Men comprised 36.9 percent of the petitioners, women 36.3 percent and joint petitioners 27.8 percent. The vast majority of the debtors had modest incomes; the average debtor’s gross income was $28,173 (adjusted to 2006 dollars). Additionally, almost all of the debtors were in extreme financial distress at the time of their filing.


To obtain a copy of the article summarizing the findings of the Chapter 13 Project, please contact John Hartgen at 703-739-0800 or via email at [email protected].


ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,500 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit For additional conference information, visit