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Bob Lawless
University of Illinois
I'm a college professor with 3 kids.
Recent Activity
On behalf of the other Credit Slips bloggers and myself, I would like to welcome Professor Chris Odinet as a guest blogger. Chris is a professor at the University of Iowa College of Law and is part of a new... Continue reading
Posted Apr 19, 2021 at Credit Slips
When one is looking at total bankruptcy filings, the subchapter V and even all the chapter 11s put together are such a small percentage that they don't move the needle at all.
Interesting. I don't think subprime auto loan defaults will drive the bankruptcy filing rate, especially if the result is that people are losing their automobiles anyway after they file. Are we sure that subprime auto loan delinquencies are rising? I don't know either way. I looked for some data, and the most recent I could find was from September 2020. It was only for auto loans generally. It suggested auto loan delinquencies were down slightly during the pandemic.
Headlines recently appeared in the usual places about a big March jump in bankruptcy filings. It is true that March 2021 total bankruptcy filings were 43,425 (according to the Epiq Systems data) and that was a 39.1% increase from February... Continue reading
Posted Apr 7, 2021 at Credit Slips
Except that is a pretty big caveat. The "child" cases--corporate subsidiary/affiliate filings--are not small numbers. In my blog post, I pointed out that Le Pain Quotidien accounted for 43% of all the chapter 11 "filings" in May. In the big chapter 11 venues--Manhattan, Delaware, Houston, and Richmond--filings by large corporate filers are almost certainly the reason those places look to have had big increases. Even in smaller jurisdictions that have fewer filings to begin with, one corporate filing could produce a spike. I think it's really difficult to understand what is going with chapter 11 filings without backing out the affiliate filings.
Like Adam said, the calculations depend on household size and state. But, let's use a 2-person household in Indiana. The median income for a 2-person household in Indiana is $65,577. A monthly income of $15,500 is $186,000. That is over the applicable median income by $186,000 - $65,577 = $120,423. Therefore the MPO should be $58,500 plus 150% of the excess over $100,000. Stated mathematically: $58,500 + 150% * ($120,423 - $100,000) = $58,500 + $30,634.50 = $89,134.50. The plan would have to pay that amount over 36 months which is a monthly payment of $2,476 or 16% of their gross monthly income. (The bill says that the relevant amount should be $94,500 plus 150% of the excess of the amount over $100,000. That was a mathematical error. The figure should have been $58,500, which is the sum of the amounts for a person with income of an excess of $100,000 over the state median income.) The means-test payment would depend on a lot of things, not the least of which are secured debt payments. The $257,000 payment you calculated would be for a five-year plan where CBRA plans are three-year plans. The $257,000 total payment works out to about 27% of monthly gross income. That does not sound like a lot in the abstract, but considering that take-home pay will be a lot less and with some home-loan and car-loan payments, there will be little margin for error. Indeed, even at 16% of gross monthly income, the MPO is hardly a free ride.
Toggle Commented Jan 12, 2021 on CBRA Op-Ed at Credit Slips
As Credit Slips readers know, the Small Business Reorganization Act added subchapter V to chapter 11 of the Bankruptcy Code earlier this year. My go-to resource on subchapter V has been a thorough summary written by Judge Paul Bonapfel of... Continue reading
Posted Dec 11, 2020 at Credit Slips
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A popular narrative is that bankruptcy filing rates are increasing dramatically. That is not true. If you want to know what is happening with the bankruptcy filing rate during covid-19, the best source is Ed Flynn's analyses over at the... Continue reading
Posted Aug 5, 2020 at Credit Slips
Thanks, Jim. No need to attribute to me. All I did was "bucket fill" a map I had using the list in Collier. It took about three minutes, if that. As to Minnesota, I don't know if the law changed. Collier does not list it as an opt-out state
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Professor Emily Kadens has just published a great paper that explodes the myths about Twyne's Case. We all know Twyne as the case where an insolvent farmer gave away his sheep, thereby leading to a Star Chamber decision that laid... Continue reading
Posted Jul 29, 2020 at Credit Slips
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OK, bankruptcy mavens. What is this a map of? Answer below the fold. That's right, the states in blue have opted out of the federal exemptions and only allow bankruptcy filers to use the state exemptions, at least according to... Continue reading
Posted Jul 29, 2020 at Credit Slips
My colleague, Ralph Brubaker, and Gerald Posner have a New York Times op-ed assailing how the Sacklers are using Purdue Pharma's chapter 11 to shield themselves from personal liability. The bankruptcy world knows this tactic under the labels of third-party... Continue reading
Posted Jul 22, 2020 at Credit Slips
That is a good point. The FJC database captures the checkbox on the petition, which only asks about bankruptcies in the last eight years so using that datapoint does tend toward an overcount. In the Consumer Bankruptcy Project data, however, one-sixth of the filers who check the box are disclosing a bankruptcy that was more than eight years old and presumably are picked up as a repeat filer in the FJC data. (The FJC database does not have the date of the prior bankruptcy.) More significantly, there are ways my estimate undercounts. Based on recent data, people live an average of 32 years after their bankruptcy, but that number was almost certainly several years higher in the 1990s and 2000s when bankruptcy filers were younger on average. That interacts with a slightly increasing life expectancy in difficult ways to compute. Also, there has been a slight downward trend in joint filings, meaning today's joint filing rate is probably lower than it was historically. Putting all that together is why I took my 11.1% computation and said "about 10%" is a good estimate. We are not going to do better than a ballpark estimate using these figures. What surprised me is that estimate is magnitudes higher than I would expect many people would guess.
The past few days I had been wondering exactly how many persons in the U.S. have filed bankruptcy. By that, I don't mean how many filed last week, last month, or last year. Rather, how many persons walking around the... Continue reading
Posted Jun 22, 2020 at Credit Slips
Prediction: you will begin to see stories about an explosion of chapter 11 filings in May 2020. Well, that is not much of a prediction because I already have seen two. Chapter 11 filings did not explode in May. A... Continue reading
Posted Jun 3, 2020 at Credit Slips
(Updated and corrected, 5/22). An earlier post noted that bankruptcy filings were down substantially over 50% the first two weeks of April. As the American Bankruptcy Institute reported, bankruptcy filings declined by 46% over the entire month and on a... Continue reading
Posted May 21, 2020 at Credit Slips
Support seems to keep building even more for changes to where large corporate debtors can file chapter 11. The latest is a letter from "163 sitting, recalled, or retired United States Bankruptcy Judges." From the letter: The venue selection options... Continue reading
Posted May 5, 2020 at Credit Slips
With the Covid-19 pandemic, there has been a lot of talk about a coming surge of consumer bankruptcy filings. In the very short-term, however, bankruptcy filing numbers are down. According to data from Epiq Systems, daily bankruptcy filings declined 18.4%... Continue reading
Posted Apr 16, 2020 at Credit Slips
The Business Law Section of the American Bar Association has posted a model standstill/tolling agreement drafted by Jonathan Lipson and Norm Powell. Business relationships will undoubtedly strain as the crisis means more parties are not able to fulfill their side... Continue reading
Posted Apr 15, 2020 at Credit Slips
Professor Ted Janger of Brooklyn Law School sent me a proposal for a small change to the Bankruptcy Code that might significantly help small businesses affected by the COVID-19 pandemic. His idea merits consideration. In Ted’s words: Obviously, it is... Continue reading
Posted Mar 15, 2020 at Credit Slips
Welcome to occasional guest blogger, David Lander, currently a professor of practice at Saint Louis University School of Law. In addition to his current and past academic postings, David has practiced consumer bankruptcy law with legal services organizations as well... Continue reading
Posted Dec 16, 2019 at Credit Slips
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Every month I see stories about the bankruptcy rate moving up and down. The truth is that the U.S. bankruptcy filing rate has remained flat over about the past four years. The table to the right shows the total number... Continue reading
Posted Nov 14, 2019 at Credit Slips
The inimitable John Lynch emailed to let me know that the call for papers is open for the 2020 Boulder Conference on Consumer Financial Decision Making, to be held from May 17-19, 2020. Much more information, including how to submit... Continue reading
Posted Nov 14, 2019 at Credit Slips
Keith, who said the trustee got paid? More seriously, I think you're right. There needs to be a reference in section 326(b) to section 1183. Until then, do you think a confirmed plan that authorized payment would be enough? I guess it remains to be seen whether there are many nonstanding trustees appointed in these cases. And, I am not aware of any redline yet for the new law.
Is there a drafting error in the Small Business Reorganization Act? The other day I posted my estimate that 42% of chapter 11's would qualify, but my sharp-eyed colleague, Ralph Brubaker, noticed something wonky (in all senses of the word)... Continue reading
Posted Sep 17, 2019 at Credit Slips