New Report Addresses Trends in Consumer Bankruptcy

Personal bankruptcy trends in Oak Park and throughout the U.S. can sometimes provide us with a bigger picture concerning consumer debt and economic stability. A new report from the Consumer Financial Protection Bureau (CFPB) addresses recent trends in consumer bankruptcy filings and the ways in which those trends have changed in the last two decades. As such, the report considers how consumer bankruptcy filings trends shifted with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) in 2005, and the foreclosure crisis and subsequent recession that began more than 10 years ago.

What does the CFPB have to say about bankruptcy trends in the 2000s? We will say more about the report and its potential implications for consumers in the present who are considering bankruptcy.

Key Aims of the CFPB Report
Given that the new CFPB report stretches over a period of nearly 20 years, there are some key aims that the authors intended to address. Those key aims, or questions, include the following:
  • How was the bankruptcy system being used from 2001 to 2018?
  • Who was using the bankruptcy system, and what were some of the characteristics of those consumers?
  • What type of debts were most common in consumer bankruptcy filings across the 2000s, and how have those trends shifted?
  • How does bankruptcy help consumers to “recover from financial shocks”?
  • How has the relationship between consumer bankruptcy and debt collection evolved over the course of the 2000s?
  • Does the bankruptcy system impact the costs and availability of consumer credit?
To answer these questions, the CFPB examined a variety of bankruptcy filings from many different types of consumers. Overall, the report focuses on consumers who filed either for Chapter 7 or Chapter 13 bankruptcy during the 2001-2018 period.

Important Conclusions from the CFPB Bankruptcy Report
The report includes an analysis of about five million consumer credit records that were collected by the CFPB’s Consumer Credit Panel (CCP), which it describes as “a longitudinal, national representative sample of . . . credit records maintained by one of the three nationwide credit reporting companies.” The following are some of the key findings or conclusions in the report:
  • Approximately 75% of bankruptcy filings between 2001-2004 were Chapter 7 filings, which likely was due to the “rush to file” that occurred before the BAPCPA became effective;
  • In 2005, prior to the BAPCPA taking effect, 80% of consumer bankruptcy filings were under Chapter 7, confirming the notion that consumers “rushed to file” for Chapter 7 prior to the new bankruptcy law, which made it more difficult for many consumers to be eligible for Chapter 7 bankruptcy;
  • Between 2015 and 2018, Chapter 7 filings had decreased to just over 60% of all consumer filings;
  • Most bankruptcy petitions ultimately lead to a discharge or a dismissal; and
  • Average mortgage debt in a Chapter 7 or Chapter 13 bankruptcy case was about double during the recession as it has been in more recent years.
Contact an Oak Park Consumer Bankruptcy Lawyer
Do you have questions about filing for consumer bankruptcy? Do you need advice from a consumer protection advocate about which chapter of bankruptcy is right for you? An experienced Oak Park bankruptcy attorney at our firm can speak with you today. Contact the Emerson Law Firm to learn more about the services we provide to consumers and their families.

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