By compiling a novel data set from bankruptcy court dockets recorded in Delaware between 2001 and 2002, the authors build and estimate a structural model of Chapter 13 bankruptcy. This allows them to quantify how key debtor characteristics, including whether they are experiencing bankruptcy for the first time, their past-due secured debt at the time of filing, and income in excess of that required for basic maintenance, affect the distribution of creditor recovery rates. The analysis further reveals that changes in debtors’ conditions during bankruptcy play a nontrivial role in governing Chapter 13 outcomes, including their ability to obtain a financial fresh start.… Read More
Confirmation of the Debtor’s Chapter 13 plan was delayed for 15 months due to an adversary proceeding to cram-down a residential mortgage held by JPMorgan Chase. Following dismissal of the adversary proceeding, the Debtor proposed a plan that would have run for 60 months from confirmation. Because that plan would have run for a total of 75 months from the first §341 Meeting of Creditors, the Trustee objected.
Finding that this issue had already been addressed by the 4th Circuit in West v. Costen, 826 F.2d 1376, 1378 (4th Cir. 1987), the bankruptcy court held that “he applicable commitment period cited in § 1329(c) begins with the first payment made under a confirmed plan and not the first payment due under a proposed plan, which is typically due within one month of filing the petition.” This is still subject to the other requirements of § 1329, including good faith, but any delays in the adversary proceeding were “not fully or even mostly the debtor’s fault” and the Trustee’s failure to engage had further delayed that proceeding.… Read More