Chapter 13 Outcomes

Roughly 40% of bankrupt consumers file under Chapter 13. However, scholars have consistently criticized the chapter, sometimes calling for its elimination. Much of this criticism is motivated by the longstanding statistic that only one‐third of Chapter 13 debtors obtain a discharge. Despite its prominence, much research underpinning this statistic is decades old and relies on small samples from a few bankruptcy courts. This paper reexamines the Chapter 13 discharge rate using the universe of recently filed bankruptcy cases. We first clarify that there are multiple plausible definitions of the “discharge rate.” Most prior literature measures the share of Chapter 13 cases that obtain a discharge in Chapter 13, and sometimes the discharge measure is expanded to include conversions to Chapter 7. By matching cases based on debtor names, we can observe whether a debtor receives a discharge in a subsequent case. Using this matching procedure, we introduce a new definition—the share of debtors who receive a discharge within 6 years of their Chapter 13 filing. We find that, for cases filed between 2008 and 2014, the discharge rate exceeds the oft‐cited one‐third statistic. Plausible national discharge rates vary from 40% (percent of Chapter 13 cases that obtain a discharge in Chapter 13) to 66% (percent of attorney‐represented, first‐time Chapter 13 debtors who obtain a discharge within 6 years). We also examine geographic patterns in discharge rates across districts and quantify the role of attorney representation, conversion rates, and repeat filing rates in explaining cross‐district variation.