Supersedes Working Paper 07-31 - The Anatomy of U.S. Personal Bankruptcy Under Chapter 13

The authors estimate their model using a novel data set they construct from bankruptcy court dockets recorded in Delaware between 2001 and 2002. The authors’ estimation results highlight the importance of debtor’s choice of repayment plan length on Chapter 13 outcomes under the restrictions imposed by the bankruptcy law. The authors use the estimated model to conduct policy experiments to evaluate the impact of more stringent provisions of Chapter 13 that impose additional restrictions on the length of repayment plans. The authors find that these provisions would not materially affect creditor recovery rates and would not necessarily make discharge more likely for debtors with income above the state median income.