BAPCPA Report - 2014
2014 Report of Statistics Required by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.
Under 28 U.S.C. § 159(b), enacted as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), the Director of the Administrative Office of the United States Courts (AO) is required to submit an annual report to Congress on certain bankruptcy statistics detailed in 28 U.S.C. § 159(c). Section 159(a) provides that clerks of the bankruptcy courts "shall collect statistics regarding debtors who are individuals with primarily consumer debts seeking relief under chapters 7, 11, and 13 of title 11." The Director of the AO is required to compile this information, analyze it, and make it accessible to the public as well as Congress. This report is prepared to fulfill the statutory requirement. Tables in the report display data nationally, by circuit, and by district.
Summary of Findings
During calendar year 2014, nearly 900,000 bankruptcy petitions were filed by individuals with predominantly consumer debt, 12 percent fewer than in 2013. Approximately 66 percent of the petitions, down from 68 percent in 2013, were filed under chapter 7, in which a debtor's nonexempt assets are liquidated and the proceeds distributed to creditors. About 34 percent, up from 32 percent in 2013, were filed under chapter 13, in which individuals with regular income and who have debts below a statutory threshold make installment payments to creditors under court-confirmed plans. One-tenth of one percent of petitions filed by individuals with predominantly consumer debt were filed under chapter 11, which allows businesses and individuals to continue operating while they formulate plans to reorganize and repay their creditors.1
Approximately 1 million consumer cases were closed during calendar year 2014. Approximately 66 percent of the closed consumer cases included in the data analyzed for this report were closed under chapter 7, about 34 percent under chapter 13, and fewer than 1 percent under chapter 11.
Consumer debtors seeking bankruptcy protection under chapters 7, 11, or 13 during 2014 reported holding total assets in the aggregate amount of $87 billion and total liabilities in the aggregate amount of $140 billion. The total assets reported by consumer debtors fell 21 percent below the comparable 2013 amount, and the total liabilities for the same set of cases fell 18 percent below the comparable data for 2013. (When considering the magnitude of these decreases, one should keep in mind that consumer filings in 2014 fell 12 percent over the previous year.)
The median average monthly income reported by all debtors was $2,616 (2 percent lower than in 2013), and the median average reported monthly expenses were $2,600 (3 percent lower than in 2013).2 From filing to disposition, chapter 7 consumer cases closed in 2014 had a mean time interval of 218 days and a median time interval of 115 days. A total of 171,105 reaffirmation agreements were reported as filed in 123,035 chapter 7 consumer cases terminated during 2014. In 36 percent of the chapter 13 cases filed during 2014, debtors reported that they had filed for bankruptcy protection during the previous eight years, 3 percent more than in 2013.
In accordance with BAPCPA, the bankruptcy statistics in this report are itemized by chapter of the Bankruptcy Code and report only data in cases filed by individual debtors with predominantly consumer debts ("consumer cases"). In chapter 7 cases, debtors’ nonexempt assets are liquidated, and the proceeds are distributed to creditors. Under chapter 11, debtors are allowed to continue operating while they formulate plans to reorganize and repay their creditors. Businesses are more likely than consumers to file under chapter 11, although some consumers whose debts exceed the statutory thresholds for chapter 13 file under chapter 11. Under chapter 13, individuals with regular income who have debts below a statutory threshold make installment payments to creditors under court-confirmed plans. The tables noted in the list below have been created for this report as specified in 28 U.S.C. § 159(c).
28 U.S.C. § 159(c)(3)(A) and 28 U.S.C. § 159(c)(3)(C)
Assets and Liabilities Reported by Debtors
|28 U.S.C. § 159(c)(3)(B)||Income and Expenses Reported by Debtors||2|
|28 U.S.C. § 159(c)(3)(D)||Time Interval from Filing to Closing||3|
|28 U.S.C. § 159(c)(3)(E)||
|28 U.S.C. § 159(c)(3)(F)(i)||Property Valuation Orders||5|
|28 U.S.C. § 159(c)(3)(F)(ii)||Chapter 13 Cases Closed by Dismissal or Plan Completion||6|
|28 U.S.C. § 159(c)(3)(F)(iii)||Prior/No Prior Filings Reported by Debtors||7|
|28 U.S.C. § 159(c)(3)(G)||Creditor Misconduct and Punitive Damages||8|
|28 U.S.C. § 159(c)(3)(H)||Rule 9011 Sanctions Imposed Against Debtors’ Attorneys||9|
The naming convention used for the tables in this report provides that the alphabetic character immediately following the table number indicates the chapter(s) of the Bankruptcy Code associated with the cases included in the table. "A" indicates cases under chapter 7 only; "B" indicates cases under chapter 11 only; "D" indicates cases under chapter 13 only; and "X" indicates cases under chapters 7, 11, and 13 combined. For example, Table 1D reports assets and liabilities for cases filed under chapter 13.3
Methodology and Data Limitations
The U.S. bankruptcy courts send data to the AO when a case is filed, when certain motions are filed in the case, and when the case is terminated. The data are then compiled annually for the purpose of this report. Many BAPCPA tables, particularly those reporting data on debtors’ assets, liabilities, income, and expenses, rely on data provided by debtors when they submit required forms, schedules, motions, agreements, and other filings to the court. Most of these data, as specified in 28 U.S.C. § 159(c), are provided exclusively by the debtors and are not validated either by the courts or the AO.
With respect to data collected from forms and schedules submitted at filing, debtors may fail to provide some or all of the data required for the BAPCPA tables. Therefore, analyses involving two or more columns in any table may overstate or understate differences. When all required data from a debtor are missing, either because of omission or delayed submission, analyses involving the data and the number of cases become unreliable. Therefore, caution should be used when analyzing columns of data or comparing any column of data to the number of cases filed.
Reliance on debtor-provided data may introduce other sources of error. One likely source of error arises when a debtor inaccurately reports assets, liabilities, income, or expenses at the time of filing. Those inaccuracies, if significant enough, may affect district, circuit, and national totals for the relevant fields in the tables in this report. In this report, data from four cases in which consumer debtors reported either assets or liabilities exceeding $5 billion (chapter 7 cases filed in the District of New Hampshire, Southern District of Florida (FL-S), and Northern District of Georgia (GA-N) and a chapter 13 case filed in GA-N were excluded from the tables on assets and liabilities.
Data on Cases Filed and Closed
Another limitation relates to the first column of data in each table, which presents total cases. Some tables include reopened and transferred cases in the totals, but others omit these cases. Reopened and transferred cases are excluded when the data would be duplicative. For example, totals for assets and liabilities at the original filing of a case are the same for each reopening of that case. Counting the cases twice (once at filing and once at reopening) would distort the data on reported assets, liabilities, income, and expenses. In all other instances in which they would not affect the results, these cases are included.
Transaction data refer to case-related events such as reaffirmation agreements, valuation orders, creditor misconduct, and attorney sanctions that occur during bankruptcy proceedings (see Tables 4, 5, 8, and 9). Such data are typically captured in the courts’ docketing activity.
In many instances, BAPCPA requires a report of the total number of cases in which a specific type of transaction has occurred. This affects the way that transaction data are reported. A case may have more than one occurrence of a particular type of transaction. For this reason, the case must be concluded before the AO can report whether the case meets the requirement to be counted and to ensure that no case is counted more than once. Thus, tables based on transaction data are based only on data from cases closed during the reporting period. These tables are subject to the same limitations noted in the section on cases filed and closed. Case activity that occurred prior to October 17, 2006, in a case that closed during the reporting period would not have been captured, causing transaction data to be underreported.
In addition, because a case may have more than one occurrence of a specific type of transaction, but the characteristics of each transaction may be different, the case must be counted in each column of a table whenever any occurrence meets the criteria for data in that column. If, for example, a debtor enters into three reaffirmation agreements, two of which include certification from the debtor's attorney and one of which does not, the case is counted in the column representing "number of cases with agreements filed pro se" as well as the column representing the "total number of cases with agreements filed." Furthermore, if, in the example above, the court approves one reaffirmation agreement and denies the other two, the case is also counted in the column representing the "number of cases with agreements approved."
Because transaction data are captured from docket activity, the collection of accurate transaction data relies on debtors, their attorneys, and other case parties who file motions, agreements, and other documents with the courts to identify them appropriately. If a filer fails to note the correct court event at docketing, the data may not be reported accurately or at all. If the filer submits multiple matters under a single court event, the activities may be undercounted or not counted at all.
Assets and Liabilities Reported by Debtors
Tables 1A, 1B, 1D, and 1X set forth the assets and liabilities reported by debtors in total and by category of assets and liabilities, as well as the total net scheduled debt reported by the debtors on Official Bankruptcy Form 6—Summary (B6—Summary of Schedules). All tables that report assets and liabilities (1A, 1B, 1D, and 1X) present data on cases filed during the reporting period by individual debtors with primarily consumer debt. The data for these tables are provided exclusively by the debtors and cannot be validated by the courts. These data typically are provided by a debtor at the time of filing or within 14 days thereafter as required by the Federal Rules of Bankruptcy Procedure. They are not typically updated as the case proceeds. Data for reopened and transferred cases are excluded to prevent duplicate reporting.
"Net scheduled debt" is the difference between the total amount of debt and obligations of a debtor reported on the schedules and the amount of such debt reported in categories that are predominantly non-dischargeable. Debt that is predominantly non-dischargeable may include, but is not limited to, domestic support obligations, taxes, student loans, and pension obligations. Thus, net scheduled debt approximates the amount of debt reported by the debtor at the time of filing that may be eligible for discharge (without regard to security interests) during the case and is referred to in 28 U.S.C. § 159(c)(3)(C) as the "aggregate amount of debt discharged in cases filed during the reporting period."
"Net scheduled debt," however, overstates the amount of debt actually discharged by the amount of secured debt (e.g., mortgages on real property and many car loans) that remains after the discharge. A discharge in bankruptcy releases the debtor from personal liability for certain specified types of debts. Although a debtor is not personally liable for discharged debts, a valid lien that has not been voided in the bankruptcy case will remain in effect after the bankruptcy case has been closed. Therefore, unless the debtor continues repaying the discharged debt, a secured creditor may enforce the lien to recover the property that secures payment of the debt. The statute does not provide for linkage of either real or personal property valuations with any claims by creditors secured by such property in determination of "dischargeable" debt.
Table 1X shows that individual debtors with primarily consumer debt seeking bankruptcy protection under chapters 7, 11, or 13 during 2014 reported holding total assets in the aggregate amount of $87 billion. Seventy-three percent of these assets were categorized as real property, and 27 percent as personal property. Apart from districts with fewer than 200 filings each (Northern Mariana Islands, U.S. Virgin Islands, and Guam), debtors in the Northern District of California (CA-N) reported the most assets per completed schedule at $211,000 in assets on average, and filers in the Western District of Tennessee (TN-W) reported the fewest assets, with the average filer reporting $44,000 in assets.
Debtors reported total liabilities in the aggregate amount of $140 billion, with 56 percent of liabilities categorized as secured claims, 2 percent as unsecured priority claims, and 41 percent as unsecured non-priority claims. Overall, debtors categorized 93 percent of debts and obligations as dischargeable debt. Excluding districts with fewer than 200 filings each, debtors in CA-N reported the most liabilities per completed schedule with $373,000 in liabilities on average, and filers in TN-W had the fewest liabilities per filing, averaging $65,000 in liabilities per completed schedule.
Income and Expenses Reported by Debtors
Tables 2A, 2B, 2D, and 2X present data on the income and expenses of debtors as reported by the debtors themselves on the Official Bankruptcy Form 6—Summary (B6—Summary of Schedules). Current monthly income data reflect income from all sources. Average monthly income data reflect total income for the last full six months prior to the bankruptcy filing, divided by six. The data for these tables are provided exclusively by the debtors and are not validated by the courts. A debtor typically provides the data at the time of filing or within 14 days of filing as required by the Federal Rules of Bankruptcy Procedure (Fed. R. Bankr. P. 1007). Only data provided during the initial filing of each case are counted in Tables 2A-2X. Data for reopened and transferred cases are excluded to prevent duplicate reporting. Median values are calculated only when 10 or more cases are reported.4
Table 2X shows that 883,930 consumer cases were filed in 2014 under chapters 7, 11, and 13 across the nation, and 815,234 debtors completed the forms needed to include their data in these tables.5 The median current monthly income6 of debtors who completed the relevant forms was $2,882, 2 percent less than the $2,926 median current monthly income reported in 2013. The median average monthly income7 was $2,616, a 2 percent decrease from 2013, and the median average expenses8 were $2,600, 3 percent less than in 2013. CA-N had the highest median current monthly income with $3,763, and the District of Puerto Rico (PR) had the lowest median current monthly income with $1,699. Filers in the District of Alaska (AK) had the highest median average monthly income with $3,474 and filers in PR had the lowest median average monthly income with $1,869. Filers in AK had the highest median average expenses with $3,589, and filers in TN-W had the lowest with $1,640.
Time Interval from Filing to Closing
In accordance with 28 U.S.C. § 159(c)(3)(D), Table 3 reports the mean time interval between filing and closing for consumer cases filed on or after October 17, 2006, under chapters 7, 11, and 13 and closed during 2013. The median time interval also has been included to provide perspective on the mean value by reducing the effect of data outliers, although median values are calculated only when 10 or more cases are reported. Reopened cases are excluded from this table because most reopened cases are filed and closed relatively quickly to settle administrative matters and do not proceed in the same way as original filings.9 For transferred cases, the mean and median time intervals are calculated from the date the case is received at the new location to the closing of the case at that location.
During the 12-month period ending December 31, 2014, a total of 1,009,127 consumer cases opened on or after October 17, 2006, were terminated under chapters 7, 11, and 13, with a mean time interval from filing to disposition of 531 days and a median time interval of 140 days. The mean is 16 percent higher than that for 2013, and the median is 5 percent greater than in 2013. The greater rise in the mean disposition time (relative to the median time) suggests that the mean is heavily influenced by particularly long-running cases. As the breakdown by chapters below indicates, much of the growth was in chapter 11 and chapter 13 cases, for which longer disposition times can indicate more cases receiving discharges and fewer receiving dismissals (see Table 6).
Of the 662,937 chapter 7 consumer cases filed on or after October 17, 2006, and closed in 2014, the mean time interval from filing to disposition was 218 days, and the median time interval was 115 days. By comparison, the mean time interval in 2013 was 212 days and the median was 116 days. The District of Wyoming had the highest median of any district at 368 days, and the Southern District of Iowa had the lowest median at 98 days.
A total of 1,317 chapter 11 consumer cases filed on or after October 17, 2006, were closed in 81 districts during 2014. The mean time interval from filing to disposition was 677 days (up from 647 days in 2013), and the median time interval was 593 days (down from 596 days in 2013). Only 25 districts had 10 or more chapter 11 cases closed in 2014. Of those 25 districts, the District of Arizona had the highest median at 1,016 days, and the Northern District of Illinois (IL-N) had the lowest median at 213 days.
A total of 344,873 chapter 13 consumer cases filed on or after October 17, 2006, were terminated during 2014. The mean time interval from filing to disposition was 1,133 days (up from 1,036 days in 2013), and the median time interval was 1,229 days (up from 1,092 days in 2013). The Southern District of West Virginia had the highest median at 1,909 days, and the Eastern District of New York had the lowest median at 221 days. However, the median and mean do not accurately convey the time required for a typical chapter 13 case; rather, they are indicators of the percent of chapter 13 cases closed by discharge, as plan completion typically takes much longer than dismissal.10
A debtor may enter into a reaffirmation agreement with a creditor to continue paying a dischargeable debt following bankruptcy. This may occur when, for example, a debtor wants to keep an automobile and continue making payments on it. If an attorney represents the debtor during the bankruptcy, the debtor's attorney may or may not represent the debtor during negotiation of a reaffirmation agreement. For purposes of this report, a reaffirmation agreement is considered "pro se" if it was submitted without the certification of an attorney contained in Part IV of Form 240A, regardless of whether the debtor was otherwise represented in the case by an attorney.
Table 4 reports only on reaffirmation agreements filed in cases under chapter 7.11 Varying local practices govern the procedures for approving and denying reaffirmation agreements filed with the courts. In many districts, the court does not issue orders with respect to reaffirmation agreements filed with certification by debtors’ attorneys. In these instances, the reaffirmation agreement between the debtor and creditor is implicitly accepted without further court action and may or may not be recorded or otherwise noted in court documentation of the case. As a result, the difference between the number of reaffirmation agreements filed and the number of reaffirmation agreements approved does not represent the number of reaffirmation agreements denied. Moreover, sometimes multiple reaffirmation agreements are submitted together, some with and others without attorney concurrence, and a court order may fail to specify decisions of the court on the individual reaffirmation agreements. For these reasons, the data reported for approved reaffirmation agreements may not be representative of the total number of reaffirmation agreements executed by the parties.
As Table 4 illustrates, a total of 171,105 reaffirmation agreements were reported as filed in 684,183 chapter 7 consumer cases terminated during the 12-month period ending December 31, 2014. IL-N had the highest total number of cases in which reaffirmation agreements were filed (7,122), followed by the Central District of California (6,311 cases) and Eastern District of Michigan (5,279). Nationwide, 18 percent of chapter 7 cases closed had at least one reaffirmation agreement filed, same as 2013; the Central District of Illinois reported the highest percentage of cases closed that had at least one reaffirmation agreement filed (39 percent). In 10 percent of cases with reaffirmation agreements filed, one or more agreements were submitted without attorney certification (pro se). The District of Kansas (KS) had the highest number of cases in which at least one pro se reaffirmation agreement was filed (1,315 cases). At least one pro se reaffirmation agreement was filed in 2 percent of chapter 7 cases closed. The Middle District of Alabama (27 percent of cases) and KS (24 percent) had the highest percentage of chapter 7 cases closed in which one or more pro se reaffirmation agreements were filed.
One percent of cases in which a reaffirmation agreement was filed had at least one reaffirmation agreement approved by order of the court. However, as described above, this does not indicate that reaffirmation agreements were denied in 99 percent of the cases. In 2014, the District of Montana (MT) reported the highest percentage of cases in which at least one reaffirmation agreement had been approved (89 percent), followed by the District of Colorado (29 percent) and Southern District of Illinois (20 percent). These three districts accounted for 57 percent of the cases in which at least one reaffirmation agreement was approved.
Property Valuation Orders
In some cases, motions are made to the court to determine the value of property securing an allowed claim under 11 U.S.C. §§ 506 and 1325 and Fed. R. Bankr. P. 3012. Table 5 shows the number of cases closed in 2014 in which final orders were entered determining the value of property securing a claim in an amount less than the amount of the claim, as well as the number of final orders entered determining the value of property securing a claim. Additional columns of data were added to provide further perspective on the required data.
A total of 351,960 chapter 13 consumer cases were terminated in 2014. Final orders determining the value of property securing a claim were entered in 12,345 of the cases. In 6,733 cases, the value of property was reported in one or more final orders; in 3,824 (57 percent) of those cases, at least one final order valued the property at less than the full amount of the claim.
A case may have more than one final order determining the value of property securing a claim. In total, 15,365 final orders were entered in the 12,345 cases. Determinations of the value of property were reported in 8,580 final orders, of which 4,558 (53 percent) were valued below the amount of the claim. The Eastern District of California (CA-E) reported that 3,212 final orders had been entered determining the value of property securing a claim, the highest total of any district. Sixty-five percent of the final orders determining the value of property securing a claim (9,995 final orders) were entered in four districts (the District of South Carolina, CA-E, Middle District of Florida, and FL-S); 44 districts reported no final orders determining the value of property securing a claim.
Chapter 13 Cases Closed by Dismissal or Plan Completion
Table 6 shows the number of cases in which plans were completed in chapter 13 consumer cases, separately itemized by the number of modifications made to the plans. Table 6 also reports the number of chapter 13 consumer cases dismissed, the number dismissed for failure to make payments under the plan, and the number refiled after dismissal. For purposes of this table, a chapter 13 consumer case is counted as “refiled after dismissal” if the case was filed during the reporting period by one or more debtors who were party to a separate chapter 13 consumer case that was dismissed no more than 180 days prior to the filing date of the current case. Cases that are reopened are not included in the total for cases refiled after dismissal.
A total of 351,960 chapter 13 consumer cases filed on or after October 17, 2006, were closed by dismissal or plan completion in 2014. Table 6 illustrates that 173,322 of these cases were dismissed. In 51 percent of the cases closed (178,369 cases), the debtors were discharged after completing repayment plans, up from 45 percent in 2013 and 37 percent in 2012. Among districts with at least 10 closed cases, the District of Vermont had the highest percentage of cases (86 percent) closed by plan completion, followed by the District of North Dakota (81 percent) and District of South Dakota (79 percent). Of the 178,369 chapter 13 consumer cases in which debtors completed repayment plans, 38,459 (22 percent) had plans that were modified at least once prior to plan completion, up from 20 percent in 2013.
Nationwide, failure to make plan payments was cited in 54 percent of cases as the reason for dismissal, up from 52 percent in 2013. Among districts with at least 10 closed cases, the Eastern District of North Carolina had the greatest percentage of dismissals (89 percent) that were for failure to make payments. The District of Connecticut had the lowest percentage of its dismissals made for failure to make payments (3 percent), followed by MT (9 percent). Table 6 shows that 19,223 cases were refiled after dismissal.
Prior Filings Reported by Debtors
Table 7 reports the number of cases in which individual debtors with primarily consumer debts filed for protection under chapter 13 during the reporting period and stated on the voluntary bankruptcy petition (Official Form 1) that they previously had filed a case under any chapter of the bankruptcy code during the preceding eight years ("prior filings"). For this table, data are captured at the time of filing, and only data on the initial filing of each case are counted. Data on reopened cases are excluded to prevent duplicate reporting. The data for Table 7 are provided exclusively by the debtors and are subject to the limitations described in the section above on debtor-provided data.
In 36 percent (107,602) of the 301,103 cases in which debtors sought protection under chapter 13 in 2014, the debtors stated that they had filed a bankruptcy petition during the previous 8 years. In the remaining 193,501 cases, debtors stated that they had not filed for bankruptcy during the previous 8 years. Among districts with more than 10 filings in 2014, TN-W recorded the highest percentage of cases with prior filings at 56 percent, followed by the District of Idaho (54 percent). The districts with the lowest percentage of cases in which debtors indicated prior filings were the District of Maine (prior filings were reported in 13 percent of cases) and VT and AK (15 percent each).
Creditor Misconduct and Punitive Damages
Title 28 U.S.C. § 159(c)(3)(G) requires the Director of the AO to report on "the number of cases in which creditors were fined for misconduct and any amount of punitive damages awarded by the court for creditor misconduct.” Creditor misconduct, however, is not a specific cause of action under Title 11. At least five violations of the Bankruptcy Code could be considered creditor misconduct:
- involuntary petition filed in bad faith (11 U.S.C. § 303(i)(2)),
- willful violation of the automatic stay (11 U.S.C. § 362(k)(1)),
- collusive bidding (11 U.S.C. § 363(n)),
- violation of the injunction against attempting to collect a discharged debt (11 U.S.C. § 524(a)(2) and (3)), and
- unjustified or unsubstantiated request for a determination of dischargeability of consumer debt that is subsequently discharged (11 U.S.C. § 523(d)).
At least six other activities related to litigation procedures could also be considered creditor misconduct under certain circumstances:
- sanctionable filings under Fed. R. Bankr. P. 9011,
- improper activity related to pretrial conference and order (Fed. R. Bankr. P. 7016),
- sanctionable discovery requests, responses, or objections (Fed. R. Bankr. P. 7026),
- failure to make or cooperate in discovery (Fed. R. Bankr. P. 7037),
- failure to prosecute or to comply with court orders and rules (Fed. R. Bankr. P. 7041), and
- unreasonably or vexatiously multiplying proceedings (28 U.S.C. § 1927).
What may be reported as creditor misconduct in one district may not be reported in another. In addition, because a creditor may be reprimanded or penalized for misconduct in many ways, many of which may not be explicitly recorded on a court’s docket as a sanction, this table does not provide a comprehensive picture of sanctions imposed against creditors in bankruptcy courts. Moreover, a sanction imposed for creditor misconduct is likely limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated. Although sanctions may consist of or include directives of a nonmonetary nature, an order to pay a penalty into court, or an order directing payment to the movant of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation, the Bankruptcy Code and Bankruptcy Rules do not permit the award of punitive damages for every violation classifiable as creditor misconduct. However, as required by BAPCPA, only punitive damages are reflected in the Table 8 series.
Table 8X shows that creditors were fined for misconduct in 138 consumer cases closed during 2014 and that orders to pay punitive damages totaling $75,000 were issued in 12 of those cases.
Rule 9011 Sanctions Imposed Against Debtors' Attorneys
Fed. R. Bankr. P. 9011 provides that attorneys may be sanctioned for improper or frivolous representations to the court submitted in any petition, pleading, written motion, or other paper. The rule states that "a sanction imposed for violation of this rule shall be limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated." Any "sanction may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, … or an order directing payment to the movant of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation." The Table 9 series captures only misconduct that rises to the level required for sanctions under Fed. R. Bankr. P. 9011. Because a debtor's attorney may be reprimanded or penalized for misconduct in other ways, this table does not provide a comprehensive picture of sanctions imposed against debtors' attorneys in bankruptcy courts.
Table 9X shows that of the 1,037,603 consumer cases filed on or after October 17, 2006, and terminated in 2014, sanctions were imposed against debtors' attorneys in 46 cases, with damages totaling $54,000 awarded in 42 cases.
1 Consumer cases filed under chapter 11 are relatively infrequent (about 16 percent of chapter 11 cases filed in calendar year 2014 were consumer cases) and are generally believed to result when debtors exceed the debt restrictions of 11 U.S.C. § 109(e), which limits chapter 13 to debtors with less than $383,175 in noncontingent, liquidated, unsecured debts and less than $1,149,525 of noncontingent, liquidated, secured debts.
2 Debtors calculate their average monthly incomes and average monthly expenses and report them to the courts on line 10 of Schedule I (income) and line 22 of Schedule J (expenses). The AO then calculates the median of the average monthly incomes reported by debtors for all districts and circuits.
4 It is not meaningful to calculate medians when the number of cases is small. For this reason, the AO does not calculate medians for fewer than 10 cases at any aggregate level (e.g., district, circuit).
5 The number of cases with completed schedules differs between the Table 1 series and the Table 2 series because those tables draw data from different parts of the summary of schedules. If a debtor completed all necessary fields for inclusion in the Table 1 series, but not the Table 2 series, then that case and its data were included in the appropriate tables in the Table 1 series but not in the Table 2 series, and vice versa.
7 See note 2.
8 See note 2.
9 Tables 4, 5, 6, 8A-8X, and 9A-9X include reopened cases, whereas Table 3 does not include reopened cases. Accordingly, the total for cases closed in Table 3 may differ from the total in other tables.
10 See Table 6.
11 Although reaffirmation agreements are technically possible under other chapters of the Bankruptcy Code, they are found almost exclusively in chapter 7 cases. Because no modification of a secured creditor’s rights may be obtained under chapter 7 without consent of the creditor, a debtor who wishes to retain collateral securing a claim must negotiate a reaffirmation agreement acceptable to the creditor. In contrast, under chapters 11, 12, and 13, subject to certain restrictions, the terms of a secured claim may be altered to allow the debtor to retain use of the collateral, thereby obviating the need for a reaffirmation agreement.
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