The Consumer Bankruptcy Creditor Distribution Study

The Consumer Bankruptcy Fee Study's discovery of the magnitude of the increase of cost of system access caused by BAPCPA begs the further question of the consequences of the more expensive and elaborate system. In an environment of finite assets, who, if anyone, benefited from, was harmed or otherwise affected by these higher costs? Moreover, given BAPCPA's objective of increasing creditors' recoveries, have Congress' and the credit industry's objective been met? This study seeks to answer these questions by examining creditor distribution data from chapter 13 and chapter 7 cases filed both before and after BAPCPA's enactment. In light of the significant increase in access costs and the fact that in many cases, some or all of the chapter 13 and all of the chapter 7 attorney's fee is paid post-petition from estate assets, we set out to examine whether one of the consequences of higher legal and other administrative costs is the erosion of post-petition estate assets that would otherwise be available to pay unsecured creditors. Further, in light of the Congressional objective of halting the use of “bankruptcy as a convenient financial planning tool [enabling consumers to] skip out on debts they could repay,” we wanted to discover whether, under the BAPCPA regime, consumers are in fact able to repay a larger percentage of their unsecured debts