Chapter 13's are high risk...77.5% of closed cases ended in dismissal

[HHM]

We often mention on here that few chapter 13's actually make it to discharge.

The most recent statistical report from the court, for 2011, shows that only 22.5% of the chapter 13's that closed in 2011 were closed by discharge, 77.5% were dismissed for one reason or another.

Here is the table of cases, it breaks it down by circuit and district.

http://www.uscourts.gov/uscourts/Statistics/BankruptcyStatistics/BAPCPA/2011/table-6.pdf

I am not providing this to discourage anyone from doing chapter 13, but I think people need to go into chapter 13's with some reasonable expectations. Moreover, the report doesn't tell us how many were converted to chapter 7 bankruptcy (probably many of them). The goal of bankruptcy is to receive a discharge, one way or the other. It just so happens that 3/4's of debtors who file chapter 13 will not receive a chapter 13 discharge.

[Sammie]

Thank you for your post. Just starting 13, I can see how this can happen. Today without any warning the front brakes on our car started grinding & my husband took the car in immediately for service (it is 10 yrs. old & we do reg. main. on the car). $289 and now we have new brakes. Unexpected of course, fact of life definitely. Learning to live paying cash and not getting the cc bill next month--priceless. I guess those mani/pedi's are going to have to go on hold for awhile. We don't have a big DMI, but everything is going to be in a budget--and if it is only $20-$40 a mo. in savings, it is being saved and not interest on a cc.sammie

[frogger]

HHM - from what I see, maybe 1 out of 25 is converted to a chapter 7. I do agree that 75% + of them don't make it, for many reasons.

Many people use a 13 as an "emergency financial planner" to stop a garnishment, then never follow thru with it.

And, I am amazed at how many close without discharge because the filer did not complete their financial management course or is in arrears on child support.

Bankruptcy is a wonderful financial planning tool, however filers should actually think, plan, and follow thru with said plan. Otherwise, it's just a waste of time and money.

[magic13]

Also after studying the statistics it appears the Judge and Trustee has a lot to do with whether or not the plan works for you . Take the south district in Texas only 8% are sucessful with a very high sample size. Matter of fact if you eliminate Texas as a whole and a couple other states that 22% will rise quite a bit. The eastern district of North Carolina is at 60%

[TheBajan]

One of the things I was really concerned about when I filed was the statistics you are talking about. I guess I took it as an indicator that we probably won't make it through this and our case would get dismissed. Since then, I've learned that I don't have to be a statistic. We have a good plan and a doable payment. We are saving a little for a rainy day and we have a good budget. I love knowing we aren't using plastic anymore and actually really "saving" money is self-rewarding. I find myself not wanting to touch it once it's designated for a particular savings goal (we have both long and short term). Thanks for posting this. In my district, it appears the success rate is about 30%. A few months ago this would have scared and depressed me. Right now.... it's just a statistic. My success depends on me.

The Bajan

[justbroke]

Chapter 13s can certainly be difficult to not only get to confirmation but also to closing with a discharge! I think it's just the nature of the beast. With this statistic provided, I'm now pretty confident to say that most pro se Chapter 13 debtors never make it to confirmation with an astounding amount, probably > 90%, not making it to discharge and close. It's a tough business for sure.

My District in the 11th certainly looks like one of the tougher Districts to be in.

[frogger]

My success depends on me.

The Bajan

You just said a mouthful there and I love your attitude about it!

So much of the failure in the completion of a plan is attitude and lifestyle. Many people file bankruptcy because they actually "need" to do so. There are some however, that file bankruptcy because they choose not to pay their bills. Those also "choose" not to pay their bankruptcy plan as well, therefore contributing to the failure of the plan.

The plan is only going to be successful as the intent, motivation, and dedication that is behind it.

[jange]

HHM thanks for sharing these numbers. They are very interesting to look at. My specific district only has a 10% completion rate and almost 50% dismissal for non payment. When I was first confirmed I asked my attorney was there was anything else that I needed to do and he told me just to make my payments and on time. Now I can see why!
I agree with TheBajan, success is up to us and how motivated we are. We are more than 2 1/2 years in and we plan to make it to the end. 5 years is a long time to commit to a plan, but the end will be worth it!

[SMinGA2]

I believe many go into a 13 relying on the attorney completely, not actively participating in the structuring of their plan. That can lead to unrealistic budgets & expectations. People that are here in this forum are exceptions to the rule... Actively learning, preparing, planning.

[pamkev]

Bajan
Great attitude and one that will help you succeed

[walkthaplank]

I am certain that a large portion of those dismissed CH13's were dismissed at the 341. When I went to our first CH13 341 the trustee's counsel read into the record several pages of cases that were dismissed before she got to the cases that were going to be discussed. After she read all of the dismissals she looked at everybody in the room and said this is why you hire an attorney to file a case like this. Our case initially was dismissed because of a paperwork error my attorney made that caused our lien strip motion to be denied. The attorney then refiled and at our next 341 the counsel read several pages of dismissed cases, gave the same "hire an attorney" advice all over again. Our 13 has since been converted to a 7 so I guess we would count as two of those failed CH13's in our district

[frogger]

I am certain that a large portion of those dismissed CH13's were dismissed at the 341.

The majority in my area are dismissed for not paying as per the plan.

[momofthree]

Wow, my district has a less than 8% completion rate! Holy cow! I'm halfway through and hoping I will make it into that 7-something percent in 2 years....

[Pandora]

ours is low too... but I know we'll be successful and will get a discharge

I would be devastated to have gone through all 5 years and have it dismissed for failure to file the follow-up financial course forms! OMG - there are many out there that totally forget to do that, and then end up getting the shock of their lives. This is why we did our final course and ensured the certificate was on file with the trustee 9 months after confirmation.

C'mon March 2015!

[jmac]

I plan on doing mine for the duration and would be devastated to have it dismissed or start over. Im glad i had a little wiggle room, i started in the mid 500 range but with a few tax problems my first months in plan it has gone close to 800.