Chapter 13 Disbursements in Fiscal Year 2000 Steady Growth

Journal Issue

Nov 2001

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In April, we reported on the aspects of stability and growth in chapter 13
disbursements during 1998 and 1999.<a href="#2" name="2a">2</a> Here we present an update for fiscal year
2000 (FY 2000) in the context of the earlier work.

<h3>Filings</h3>

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.<a href="#3" name="3a">3</a> 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.<a href="#4" name="4a">4</a>

<h3>Total Disbursements</h3>

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.

<h3>Disbursements to Creditors</h3>

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,<a href="#5" name="5a">5</a> 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.

<h3>Geographical Variation</h3>

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.<a href="#6" name="6a">6</a>

<h3>Disbursements per Case</h3>

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.<a href="#7" name="7a">7</a> 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.

<hr>
<h3>Footnotes</h3>

<a name="1">1</a> 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. <a href="#1a">Return to article</a>

<a name="2">2</a> Bermant, Gordon and Flynn, Ed, "Sources of Variability in Chapter 13 Performance," ABI Journal, April 2001, p. 20. <a href="#2a">Return to article</a>

<a name="3">3</a> 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. <a href="#3a">Return to article</a>

<a name="4">4</a> See the most recent filing statistics at <a href="http://www.uscourts.gov" target="window2">www.uscourts.gov</a>. <a href="#4a">Return to article</a>

<a name="5">5</a> See Bermant and Flynn, supra note 2, for a complete list of the items in this category. <a href="#5a">Return to article</a>

<a name="6">6</a> Data are not available for Alabama and North Carolina. <a href="#6a">Return to article</a>

<a name="7">7</a> See <a href="http://www.usdoj.gov/ust" target="window2">www.usdoj.gov/ust</a> for a description of the method used. <a href="#7a">Return to article</a>

Journal Authors

Edward M. Flynn

Gordon Bermant

Journal Date

Thursday, November 1, 2001 - 12:00

Bankruptcy Rule

2001