JOURNAL OF ACCOUNTING AND FINANCE
Do Federal Bankruptcy Exemptions Fundamentally Alter Chapter 7 Bankruptcy Outcomes?
Author(s): Donald D. Hackney, Daniel L. Friesner, Matthew Q. McPherson
Citation: Donald D. Hackney, Daniel L. Friesner, Matthew Q. McPherson, (2018) "Do Federal Bankruptcy Exemptions Fundamentally Alter Chapter 7 Bankruptcy Outcomes?", Journal of Accounting and Finance, Vol. 18, ss. 6, pp. 105-114
Article Type: Research paper
Publisher: North American Business Press
Abstract:
The relationship between federal bankruptcy exemptions and Chapter 7 bankruptcy outcomes are
examined using spreadsheet modelling techniques. These techniques benchmark the nature (and
distribution) of debts discharged in Chapter 7 assets case filings. Data from Chapter 7 asset cases in the
western United States in 2010 indicate an optimal Chapter 7 asset case distribution: 9.0 percent of assets back to the debtor, 28.1 percent to unsecured creditors, 21.0 percent to secured creditors, 28.9 percent to court administrators (including trustees), 4.4 percent to creditors arising from prior bankruptcy filings, and 8.6 percent to all other creditors. The nature (and distribution) of liquidated assets allocated to creditors across debtor choice and non-debtor choice states is empirically assessed and no evidence is found to suggest debtor choice leads to a better outcome for debtors.