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Chapter 13 Disparities: This Time with a Map

posted by Bob Lawless

State Disparity in Chapter 13 UsageA few weeks ago, I put up a post describing the states with the highest and lowest per capita bankruptcy rates by chapter of the Bankruptcy Code. A closely related data point is which states have the highest percentage of bankruptcies that are chapter 13s. States with a high per capita rate of chapter 13s not surprisingly are the same states that tend to have the highest percentage of banrkuptcies that are chapter 13s.

Anyway, my point is that I made a map. Actually, I had to make the map of chapter 13 filing percentages for another purpose, and I thought maybe some other persons might have a use for it. So here it is. You are welcome to use it. If you want to download it, be sure to click on it so that a larger version opens up in a pop-up window. If you do use it, all I ask is that you attribute it back to Credit Slips and me.


I saw a study recently that correlated bankruptcy rates and ease of garnishment (especially wage garnishment) under state law. The direct relationship was pretty impressive. Utah's garnishment procedure is, for creditors, about as difficult hitting the floor if you fall out of bed. Further, and in spite of state case law to the contrary, trial courts routinely issue writs that allow garnishment of commission accounts (such as real estate agent accounts with brokerages) as if they were bank accounts, with no 25% limit. When the garnishments start hitting, people start running to the bankruptcy attorneys, and they typically need a 13.

Well in Texas anyway, most do file to save homes but also the median income in Texas is so low I think the means test may be pushing more into 13s. In Texas a family of 4 making $70k gross per year most likely will not qualify for a 7 but that same family in California (with a million more people + or - than Texas) would qualify. Same goes for every other east coast state. So because Texas companies/employers pay such crappy wages (on average) we may be seeing less people qualifying for Chapter 7 ... Intended or unintended result of the means test? Am I making a correlation that is a bit of a stretch? IDK.

Those other 50% states have very low median incomes as well. In Texas and Louisiana there has been some influx of higher paying oil and gas jobs but in Texas there has not been enough to push up that median average yet. We just have so many residents. Cost of housing and collection laws may have some minor impact as well.

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