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Research Outline

Prepared for Paul D. | Delivered February 11, 2020

Chapter 13 Bankruptcy

Goals

To provide 2-3 insights into the filing circumstances of individuals who file for Chapter 13 personal bankruptcy. Specifically, what leads them to file for bankruptcy, why they choose Chapter 13, and what their circumstances are at the time that they file.

Early Findings

What Leads People to File for Bankruptcy?

  • According to insights published by Joseph P. Doyle, a bankruptcy attorney, common causes of bankruptcy include divorce, medical bills, poor management of financial dealings such as student loans, car/home purchases, and the like, and also changes in employment status.
  • According to Harvard University, 62% of bankruptcy cases are caused by medical expenses.
  • Another survey found that unafforadable mortgages and foreclosures accounted for 45% of bankruptcies, while student loans accounted for 25.4%, and divorce accounted for 24.4%.

Why Do People Choose Chapter 13 Bankruptcy?

  • According to insights published by Credit Karma, Chapter 13 bankruptcy is "for those who have a job with steady income and want to hold onto their property." This is because "those who file [for this type of bankruptcy] need regular income to quality," and instead of debt forgiveness, they enter into a program that will allow them to restructure their debt with a repayment plan that spans 3-5 years.  
  • According to Cohen & Cohen P.C., Chapter 13 bankruptcy is advantageous for many reasons. These reasons include allowing individuals who make payments based on their budget, discharging debts that were unable to be paid off in full, keeping a home out of foreclosure, and removing multiple or expensive mortgages.

What Are Consumer Circumstances at the Time of Filing for Chapter 13 Bankruptcy?

  • Only 40% of survey respondents to filed for Chapter 13 bankruptcy said they were satisfied with the results, while 16% remained neutral.
  • 97% of individuals who filed for Chapter 13 bankruptcy had a lawyer assist them in doing so, and 41% said they were happy with their lawyer's service, while 13% remained neutral.
  • Many survey respondents to filed for Chapter 13 bankruptcy said they spend a long time trying to juggle their debts before filing for bankruptcy or consulted with a lawyer.
  • Survey respondents noted that talking to multiple lawyers was important in their process and asking a lot of questions. Their goal was to find the more experienced and knowledgeable lawyer.
  • Individuals filing for bankruptcy need to collect paperwork about their finances, debts, and accounts.