Tài liệu The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 pdf

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iii
Preface
One of the main changes that the Bankruptcy Abuse Prevention and Consumer Protection Act
of 2005 (BAPCPA) introduced was the requirement that certain debtors filing for bankruptcy
use IRS expense standards for certain expense categories rather than their current expenses to
calculate their monthly disposable income (MDI). e RAND Corporation conducted quali-
tative and quantitative analyses to estimate the effect of using the IRS standards on debtors
and to determine whether using this standard is having an effect on bankruptcy courts.
is research was sponsored by the Executive Office for U.S. Trustees (EOUST), the
mission of which is to promote the integrity and efficiency of the U.S. bankruptcy system.
is report should be of interest to state and federal policymakers concerned with bankruptcy
issues. It should also be of interest to practitioners involved in the bankruptcy system and to
the credit industry.
The RAND Institute for Civil Justice
e mission of RAND Institute for Civil Justice (ICJ) is to improve private and public deci-
sionmaking on civil legal issues by supplying policymakers and the public with the results of
objective, empirically based, analytic research. ICJ facilitates change in the civil justice system
by analyzing trends and outcomes, identifying and evaluating policy options, and bringing
together representatives of different interests to debate alternative solutions to policy prob-
lems. ICJ builds on a long tradition of RAND research characterized by an interdisciplinary,
empirical approach to public policy issues and rigorous standards of quality, objectivity, and
independence.
ICJ research is supported by pooled grants from corporations, trade and professional
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ICJ disseminates its work widely to the legal, business, and research communities and to the
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the research sponsors or of the ICJ Board of Overseers.
Information about ICJ is available online (http://www.rand.org/icj/). Inquiries about
research projects should be sent to the following address:
iv The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
Robert T. Reville, Director
RAND Institute for Civil Justice
1776 Main Street
P.O. Box 2138
Santa Monica, CA 90407-2138
310-393-0411 x6786
Fax: 310-451-6979
Robert_Reville@rand.org
v
Contents
Preface iii
Tables
vii
Executive Summary
ix
Acknowledgments
xiii
Abbreviations
xv
CHAPTER ONE
Introduction 1
Background
2
IRS Expense Standards
3
Research Questions
4
How Have Court Rulings Affected the Use of IRS Standards in Calculating a Debtor’s MDI,
and to What Extent Has is Use Affected Bankruptcy Courts’ Workloads?
4
What Fraction of Chapter 7 Filers Had Above-Median Incomes but Satisfied the Chapter 7
Presumption Because eir MDIs, After Allowed Deductions, Satisfied the Means Test?
5
To What Degree Did Use of the IRS Standards Affect Debtors Who Filed for Chapter 13?
5
For Above-Median–Income, Chapter 13 Filers, How Does MDI Calculated Using Current
Expenses Compare with MDI Calculated Using IRS Expense Standards?
5
For Above-Median–Income, Chapter 13 Filers, What, If Any, Financial Factors Are
Systematically Related to the Difference Between MDI Calculated Using Current
Expenses and MDI Calculated Using IRS Expense Standards?
5
For Above-Median–Income, Chapter 13 Filers, Do Patterns in the Differences Between MDI
Calculated Using Reported Current Expenses and MDI Calculated Using IRS Expense
Standards Differ Across Judicial Districts?
6
Research Approach
6
Qualitative Analyses
6
Bankruptcy Case Samples
7
Organization of is Report
8
CHAPTER TWO
e Bankruptcy System 9
Chapter 7 Bankruptcy
9
Chapter 11 Bankruptcy
10
vi The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
Chapter 12 Bankruptcy 10
Chapter 13 Bankruptcy
10
Bankruptcy Petitions and Schedules
10
CHAPTER THREE
Effects of the Utilization of IRS Expense Standards on the Courts 11
Computing Projected Disposable Income in Chapter 13
12
Interpretation of the IRS Expense Standards in Bankruptcy Courts
13
Adopting the IRS Expense Standards
13
Treatment of Paid-Off Cars
15
Ownership Expense Deduction for Cars and Homes at the Debtor Plans to Surrender
15
IRS Policies at Conflict with Important Bankruptcy Concerns
16
Workload on the Courts
16
CHAPTER FOUR
Empirical Analyses of the Effects of IRS Expense Standard Use on Debtors 19
Bankruptcy Case Samples
19
Fraction of Chapter 7 Cases Using the IRS Standards
21
Fraction of Chapter 13 Cases Using the IRS Standards
23
Discussion of Using IRS Expense Allowances to Calculate MDI
24
Comparing the Use of IRS Standards with Use of Actual Expenses in Calculating MDI
27
Effects of Using Specific IRS Standards
30
Effects of Using the IRS Standards on Different Types of Debtors and in Different Districts
33
CHAPTER FIVE
Summary and Conclusions 41
How Have the Court Rulings Affected the Use of IRS Standards in Calculating a Debtor’s
MDI and to What Extent Has is Use Affected Bankruptcy Courts’ Workload?
41
What Fraction of Chapter 7 Filers Had Above-Median Incomes but Satisfied the Chapter 7
Presumption Because eir MDIs Satisfied the Means Test?
42
To What Degree Did Use of the IRS Standards Affect Debtors Who Filed for Chapter 13?
42
For Above-Median–Income, Chapter 13 Filers, How Does MDI Calculated Using Current
Expenses Compare with MDI Calculated Using IRS Standards?
43
For Above-Median–Income, Chapter 13 Filers, What, If Any, Financial Factors Are
Systematically Related to the Difference Between MDI Calculated Using Current
Expenses and MDI Calculated Using IRS Expense Standards?
44
For Above-Median–Income, Chapter 13 Filers, Do Patterns in the Differences Between MDI
Calculated Using Current Expenses and MDI Calculated Using IRS Expense Standards
Differ Across Judicial Districts?
44
APPENDIX
Office Focus Group Discussion Guide 45
References
49
vii
Tables
1.1. Judicial Districts Selected for Bankruptcy Case Samples 7
4.1. Chapter 7 Cases Using the IRS Standards
22
4.2. Chapter 13 Cases Using the IRS Standards
23
4.3. Correspondence Between Deductions Using IRS Standards and ose Using
Schedule J Expenses
26
4.4. Difference in Deductions Calculated Using IRS Standards and ose Using
Corresponding Current Expenses
29
4.5. Homeowners and Renters in Our Chapter 13 Samples
31
4.6. Difference Between IRS-Related Deductions and Corresponding Current Expenses
32
4.7. Debtors’ Financial Circumstances ($K)
34
4.8. Differential Effects of Using the IRS Standards, by Debtors’ Judicial District and
Financial Attributes
36
4.9. Significance of Interdistrict Differences
38

ix
Executive Summary
One of the main changes introduced by the Bankruptcy Abuse Prevention and Consumer Pro-
tection Act of 2005 (BAPCPA) was the requirement that certain debtors filing for bankruptcy
use IRS expense standards for certain expense categories rather than their current expenses
to calculate their monthly disposable income (MDI). is change can affect both the options
available to a debtor considering filing for bankruptcy and the amount the debtor must pay to
creditors under a repayment plan.
In this RAND Corporation study, we assessed the effects of this change on debtors and
the courts. We conducted the research in three steps: First, we reviewed the case law to identify
relevant issues; second, we conducted interviews and focus groups with those involved in the
bankruptcy process to understand background and context; and third, we examined samples
of bankruptcy cases filed in eight judicial districts to estimate the effects of using the IRS stan-
dards to calculate a debtor’s MDI.
Effects on the Courts
BAPCPA took effect too recently for appellate courts to have had time to settle the many open
questions. Because there is considerable lack of uniformity among judicial districts in appli-
cation of the IRS standards in chapters 7 and 13 of the Bankruptcy Code, similarly situated
debtors may have substantially different payment obligations depending on the jurisdiction in
which they live.
Most judges report that each bankruptcy case now requires more of their time, but the
effects seem to vary greatly depending on the district. e increase in workload is not attribut-
able to any particular provision of the new law; therefore, what portion may be due to the IRS
expense standards is not known.
Results of Analysis of Bankruptcy Cases
Fraction of Chapter 7 Cases Using the IRS Standards
About 7 percent of the Chapter 7 debtors in our samples had above-median incomes, but
their deductions, including those calculated using IRS standards, resulted in MDIs that met
the Chapter 7 criteria. e percentage of debtors who filed for Chapter 7 even though their
x The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
incomes exceeded the applicable median varies considerably across the country. We have no
data on the extent to which the IRS standards, as part of the means test, may have deterred
debtors from filing under Chapter 7.
Fraction of Chapter 13 Cases Using the IRS Standards
Slightly more than one-quarter of Chapter 13 debtors in our samples had above-median
incomes and, consequently, were required to use the IRS expense standards to calculate their
MDIs. Almost three-quarters of the debtors in our samples who filed under Chapter 13 had
below-median incomes. ese debtors presumably could have filed under Chapter 7 had they
so chosen but opted for Chapter 13 filing instead.
ere was substantial variation across judicial districts in the fraction of Chapter 13 filers
whose incomes exceeded the median and, consequently, used the IRS expense standards in
calculating their MDIs.
Effects of Using the IRS Standards in Calculating MDI
In every sampled district, the average deductions allowed under the IRS standards are con-
siderably higher than the average equivalent deductions based on reported current expenses.
Higher deductions result in lower MDIs. MDI is reduced by an average of $490 in all sampled
districts combined when the IRS standards are used. In individual districts, the average reduc-
tion in MDI due to the use of the IRS standards ranges from $311 in the Middle District of
Florida to $612 in the Northern District of Ohio. e IRS standards result in larger deduc-
tions, on average, and, therefore, lower MDIs across the country.
Effects of Specific IRS Standards
Two of the IRS standards primarily account for this differential. e IRS standards for living
expenses and for transportation ownership are generally favorable to debtors. In every sample
district, these IRS standards allow debtors deductions that exceed their reported current
expenses. Conversely, in every sample district, the IRS standards for nonmortgage housing
expenses and for vehicle operation and public transportation allow debtors lower deductions
than their reported current expenses. e IRS standard for mortgage or rental expenses gen-
erally favors owners, though the differences between the deduction that owners are allowed
using the IRS standards and their current expenses in that category generally are not large. e
effects on renters of using the IRS standards for mortgage or rental expenses are mixed. In five
of the eight sample districts, using the IRS standards results in smaller deductions, on average,
than does using current rental expenses. In the other three districts, the IRS standard rental
allowance exceeded, on average, the debtors’ current rental expenses.
Effects of Using the IRS Standards on Different Types of Debtors and in Different Districts
Using IRS standards to calculate deductions benefits the average homeowner more than it does
the average renter, but the difference is small, about $65 per month. Among homeowners and
among renters, the only other significant difference in the effects of the IRS standards on differ-
ent types of debtors is for debtors with high current incomes. In general, higher-income debtors
gain less using the IRS standards rather than their current expenses than do otherwise similar,
Summary xi
lower-income debtors. For homeowners, the average difference in deductions calculated using
the IRS standards rather than current expenses is about $70 lower for each additional $1,000
in current monthly income. For renters, the average difference in deductions calculated using
the IRS standards rather than current expenses is about $175 lower for each additional $1,000
in current monthly income. is effect is significant for homeowners and highly significant for
renters. Debtors’ assets, liabilities, and expenditures were not significantly related to the effects
of using the IRS standards in calculating their deductions.
e results for the eight judicial districts examined suggest that, controlling for debtors’
financial characteristics, there are some systematic differences among the districts in the effects
of using the IRS standards instead of the corresponding current expenses to calculate a debtor’s
MDI. e district effect is more pronounced for homeowners than for renters.