More on Filing Rates

Following up on my post from Monday, Charles Tabb has posted a new paper on SSRN, Consumer Bankruptcy Filings: Trends and Indicators.  He uses A.O. data through the first half of 2006 and suggests, consistently with my post, that the long-run filing drop will not be as substantial as many seem to think.

He also looks at the Chapter 7/Chapter 13 mix and notes that the Chapter 13 filing rate is not as high as you would expect given the stated motivation of BAPCPA.  Bill Whitford's paper in the Illinois symposium offers some good reasons why you would expect the Chapter 13 filings to be low, and I think Charles's paper buttresses that.  Looking at the weekly Lundquist data to which I referred on Monday, I have a similar take on the Chapter 13 filings.  Although the share of filings has been quite high since BAPCPA, it has been steadily trending downward throughout 2006, getting closer and closer to the pre-BAPCPA filing share.  And the high filing share plainly is an artifact of the preternaturally low level of post-BAPCPA Chapter 7 filings, because the number of Chapter 13 filings after BAPCPA has been much below pre-BAPCPA levels.

Finally, the last part of Charles's paper provides a useful catalog that shows how bankruptcy filing rates correlate roughly with several indicators of consumer indebtedness, including such things as total borrowings and credit card delinquencies.  He clearly is on the right track there.  In Charging Ahead I present some detailed data on credit card borrowing and consumer credit, with some multivariate regressions finding that credit card borrowing is significantly related to bankruptcy filings, even when you account for broader borrowing trends.

Interesting paper worth the read!