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Visualizing Financial Distress

posted by Katie Porter

The Admistrative Office of the US Courts (AO) has released updated data on bankruptcy filings. While the AO data as some problems, as Bob Lawless has pointed out, I am pleased that they seem to have improved the accessibility of the data. For example, there is now an interactive map by state that is sort of fun (well, fun in my world).

One nice thing is the statistics on net scheduled debt. Given the way that some people seize on the dollars of debt in bankruptcy as a marker of the system, I like how the AO has deducted nondischargeable debt from the total debt listed by the debtor. To do otherwise, gives a misleading picture of how much "help" people get from bankruptcy. But additional caution is still needed. For the chapter 13 filers, about 2 in 3 of these people will not get a discharge of any unsecured debts because they will not complete the repayment plan. Much more importantly, these figures are total debt, the bulk of which will be mortgage and auto debt, which debtors must pay if they want to keep their homes and cars.

All in all, a better use of your time might be the interactive maps at the NY Fed. These have been upgraded recently to show delinquencies on auto loans, bank cards, mortgages, and even student loans. Check them out here.

Hat tip to former Credit Slips guest blogger, John Rao, for bringing the AO data to my attention.


The AO map says the average debt for Maine cases is $3.9 million? Huh?

That's the problem with averages -- it only takes one outlier to make the calculation meaningless. Moreover, sometimes typographical errors or just outright frivolous filings can result in a figure in the ka-jillions of dollars, which is technical math-speak for "a lot." I have not studied these particular numbers, but in the past, the AO's calculations have included large outliers which were likely mistakes.

By the way, let's not criticize the AO too quickly for reporting the numbers as given to them. I'm not sure which is worse--having a part of the government report data with obvious outliers that perhaps should be removed or having a part of the government decide which pieces of data represent the truth and which do not.

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.