“Success” Rates in Chapter 7 versus Chapter 13

by Michael H. Schwartz

“I’ve read that that just one year after bankruptcy, one in four Chapter 7 debtors was again struggling to pay routine bills vs Chapter 13 debtors.”

It seems one of the only beneficial provisions of BAPCPA was the post-filing CDE. It was intended to prevent debtors from being back where they started before filing.

In my experience over 29 years and over 3,400 cases filed, I have not experienced such a dismal reoccurrence or recidivism rate in Chapter 7 cases. My experience is more like 3%.

But, if debtors are back in the same situation after they filed b7 as there were before they filed, then either the debtors have not changed the behavior, i.e., spending money they do not have, or the social fabric needs fixing. If a debtor is back where he or she was because he or she cannot find a job to support his or her family or someone in the family gets ill and runs up a large uninsured medical bill, it would seem that we as a society either do more to prevent this from happening OR as some would have it, let the debtor drown in his or her own problem.

But his is really a debate that is raging through this country for years. Helping those in need or making those in need suffer on their own. I really do not see any resolution as long as this nation continues to have a dual personality.

It was only 150 years ago that this nation was torn between the rights of persons to have slaves and the rights of people to not be enslaved.

Michael H. Schwartz is the largest filer of bankruptcy cases for people living in Westchester and Rockland counties in New York. A graduate of New York Law School, Michael has been licensed to practice in New York State courts since 1983. He is also licensed to practice in the U.S. Bankruptcy and District Courts for the Southern, Eastern and Northern Districts of New York and the District of New Jersey as well as the Second Circuit U.S. Court of Appeals. He is a graduate of Max Gardner’s Bankruptcy and Veterans’ Boot Camps. Several media outlets have reported on his cases or sought his insights, including The New York Times.