Not Enough Chapter 13 Filings By People Who Need It Part II

drawing4Chapter 13 is a debt repayment plan, and returns a substantial amount of money to creditors every year. Creditors usually get, somewhere between a proposed 10%, up to one hundred percent of their debt, paid to them by the Chapter 13 trustee. The amount, however, is speculative, because of several factors.

There are more people filing Chapter 13 debt repayment plans in the Northern District of Illinois, which includes the Chicago Metropolitan area, then in any other district in the country. The problem with Chapter 13 filings in the Northern District of Illinois is that there are not enough of them! It’s not that there are too many. The only reason that there are more Chapter 13 cases filed around Chicago, and in particular in Cook County, is because that the Northern District of Illinois has historically been in the top three filing districts of Chapter 13’s, and of Chapter 7’s, in the country for the last 30 years. This is a function of population and the economics of the area.

There are relatively more Chapter 13’s in areas that are not terribly economically depressed, where you have a lot of population, and a significant population portion of the population s has the ability to make some repayment on their debt. In other words there is a “middle class”, or more properly a working class (or you might want to call it a working poor) that makes between 30 and $100,000 a year, can obtain credit, has some excess income with which to repay their bills, but perhaps not enough to do it without some adjustment of debts.

The second reason there are a lot of Chapter 13’s in the northern district of Illinois is that where you have population who is working and not of the subsistence level as you find in some areas like Las Vegas, where a lot of people that are working three part-time minimum wage jobs if they are working at all, is that in Northern Illinois there is a small bankruptcy bar who is willing to do Chapter 13 cases, together with a bench that is not hostile to Chapter 13 and that does not make it incredibly difficult and nasty, as they do in Florida. In some districts that do not have a high numerical count such as the middle District of Tennessee, they have a high percentage of Chapter 13 plans, because of the policies of the trustee and the bench, certain social economic aspects such as refusal of lenders to land without security, lack of exemptions to protect property in Chapter 7, religious attitudes, and other factors that make Chapter 13 the only solution to stop wage garnishment and bill collectors.

One factor is that the Bankruptcy Court, and the court clerk, at the direction of the office of the US trustee in the bankruptcy court, is encouraging pro se filers to file Chapter 13’s with no lawyer. Pro se filings of Chapter 13’s as of September 30 were 1192, with 1940 pro se Chapter sevens. Pro se Chapter 13’s are the third largest filer of Chapter 13’s in the northern district of Illinois after the #1 Chapter 13 filer, with 5456, and Geraci Law of 2384, all as of September 30. After pro se with 1192 the next highest number of filings was 456 next 335, and then a dozen firms with between 100 and 200. Only 20 entities file more than 100 Chapter 13’s in this time.