Local Labor Markets, Employment Distributions and Consumer Bankruptcy Filings: Evidence from Eastern Washington – Donald D. Hackney
Using individual level data collected in the Eastern District of Washington State, the type of employment is indentified as a significant factor in chapter choice. Additionally, a typical debtor’s field of employment could either increase or decrease the likelihood of filing for bankruptcy protection under Chapter 7of the U.S. Bankruptcy Code relative to Chapter 13 of the Code. Given that counties have different distributions of employment by industry, that different industries pay different wages (at the mean) and that under the Bankruptcy Abuse Prevention Consumer Protection Act (BAPCPA) guidelines chapter choice is significantly driven by income, these findings imply that the BPCPA legislation is creating a distortion which makes filing a Chapter 7 bankruptcy (relative to a Chapter 13 filing) easier in certain counties than in others. Thus, BAPCPA has created local economic discrimination across counties within a particular bankruptcy court jurisdiction.