Bankruptcy: Judiciary Should Take Further Steps to Make Bankruptcy Data More Accessible
Published: 2008-12-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: There have been long-standing questions about a lack of comprehensive and reliable information on consumer bankruptcies. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (Bankruptcy Reform Act) required the federal judiciary's Administrative Office of the U.S. Courts (AOUSC) to collect and report certain additional bankruptcy statistics and required the U.S. Trustee Program, which oversees bankruptcy case administration, to develop uniform final reports that provide certain specified data about each case. GAO was asked to examine the (1) availability and accessibility of data from the personal bankruptcy system and (2) potential benefits and limitations of the new data requirements of the Bankruptcy Reform Act in addressing these issues. GAO examined bankruptcy data systems and obtained documentation and interviewed staff from AOUSC, bankruptcy courts, and the Trustee Program; groups representing consumers and creditors; data providers; and academic researchers and other stakeholders.
section_title: What GAO Found
paragraphs: There are limitations to the availability, accuracy, and accessibility of data on consumer bankruptcies. AOUSC publishes certain aggregate statistics related to the numbers of filings, but few data are available on the causes of bankruptcy and the characteristics of bankruptcy filers. Studies show that the information in the bankruptcy case files is not always accurate because much of it is self-reported by debtors who frequently make errors, although these data are sufficiently reliable for the purposes of initiating a bankruptcy case. Bankruptcy case files are publicly accessible through the Public Access to Court Electronic Records system, but not in a format that allows the data they hold to be easily extracted and used for research or analysis. Another system, the U.S. Party/Case Index, was designed for nationwide searches for individual cases; while it serves that purpose, its search parameters are limited and the output does not include much of the data held in the system. Several factors create challenges to expanding data on consumer bankruptcies--most notably, privacy and security concerns related to facilitating public access to the highly personal data contained in bankruptcy files. The federal judiciary also has noted that collection of demographic and other additional data is not its mission and would require further resources. Nonetheless, a range of bankruptcy stakeholders, including some judges, researchers, and U.S. Trustee Program staff, have suggested that the judiciary identify and implement practicable ways to improve public access to data that already exist in its data systems, which could facilitate scholarly research and the formulation of bankruptcy policy and legislation. While the data requirements of the Bankruptcy Reform Act are a step toward making more information on consumer bankruptcies available, their value is likely to be limited. The new annual statistics will provide some additional information that may be helpful in identifying differences in bankruptcy cases across judicial districts. In addition, the uniform final reports required by the act will standardize the data in the reports and assist the U.S. Trustee Program in overseeing case administration. However, for several reasons the statistics required under the act are likely to be of limited value. For example, many of the statistics are relatively narrow in scope and were not intended to provide certain key information, such as the causes of bankruptcy and the demographic characteristics of filers. Further, the AOUSC data are provided as aggregated statistics--rather than data on individual cases--which limits the extent to which they can be analyzed. As such, a variety of stakeholders in the bankruptcy process told us that the underlying case-level data used to generate the statistics could be useful if made publicly available as a data set. AOUSC currently has no plans to provide public access to these case-level data, in part, officials say, because they first need to identify and address privacy and security issues. GAO acknowledges the importance of those issues, but believes that better access to bankruptcy data already held in the judiciary's data systems--such as these case-level data--would allow external parties to assess the data's reliability and limitations and could facilitate empirical research and the formulation of bankruptcy policy.

section_title: Letter
paragraphs: Over the past decade, Americans have filed more than 13 million consumer  bankruptcy cases, yet relatively little is known about the characteristics of  these individuals, the factors that led to their seeking bankruptcy  protection, or the outcomes and consequences of their cases. Questions  about the lack of certain information on consumer bankruptcies have  existed for some time. Numerous studies, including the 1997 report of the  National Bankruptcy Review Commission—an independent commission  created by Congress—have noted that relatively little is known about the  characteristics of consumer bankruptcies and that relatively little  empirical data are available through the bankruptcy system. The  commission report noted that better bankruptcy data could shed light on  important questions of interest to Congress, the judiciary, and other  stakeholders in the bankruptcy system, such as debtors, creditors, and  scholars. For example, better data could help inform policy questions  dealing with the effect of bankruptcy on unsecured creditors and the costs  of particular types of cases.
In 2005, Congress enacted major bankruptcy reform legislation with the  Bankruptcy Abuse Prevention and Consumer Protection Act of 2005  (Bankruptcy Reform Act). The act sought to expand the information  available about consumer bankruptcies by imposing new data collection  and reporting requirements on both the federal judiciary, which includes  the 90 bankruptcy districts and the Administrative Office of the U.S.  Courts (AOUSC), and the Department of Justice’s U.S. Trustee Program  (Trustee Program), which oversees the administration of bankruptcy cases  in most judicial districts. The act required the judiciary to collect and  report annual statistics—presented in the aggregate and by judicial  district—on certain characteristics and outcomes of consumer  bankruptcies. The act also required the Attorney General, who delegated  the authority to the Trustee Program, to draft rules requiring private  trustees to submit uniform final reports on individual bankruptcy cases  that included certain specific information about the case.
You asked us to review issues related to the availability of data on  consumer bankruptcies. Specifically, this report examines (1) the  availability and accessibility of data from the bankruptcy system and (2)  the potential benefits and limitations of the new data requirements of the  Bankruptcy Reform Act in addressing these issues. This report focuses on  consumer, or personal, bankruptcies rather than business bankruptcies.
To address the first objective, we reviewed materials produced by the  National Bankruptcy Review Commission, as well as academic literature  that has used, studied, or commented on the data on consumer  bankruptcies that are available from the court system and Trustee  Program. We also reviewed our past work that has used bankruptcy data.  In addition, we gathered information on the relevant data systems and  statistical infrastructures of the judiciary and Trustee Program. To address  the second objective, we reviewed provisions of the Bankruptcy Reform  Act and documentation from the federal judiciary and Trustee Program  that are related to implementation of the act’s data provisions, including  changes to official bankruptcy forms and proposed and final rules. To  address both objectives, we spoke with staff from the AOUSC’s statistics  and information technology divisions, bankruptcy court judges,  bankruptcy clerks and their staff, Trustee Program staff responsible for  information technology and trustee oversight, Trustee Program regional  offices, representatives of private trustees, bankruptcy attorneys,  academic researchers, data providers, representatives of consumer and  financial services industry organizations, and other stakeholders in the  bankruptcy system.
We conducted this performance audit from June 2007 through December  2008 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: Bankruptcy is a federal court procedure designed to help both individuals  and businesses eliminate debts they cannot fully repay as well as help  creditors receive some payment in an equitable manner. The filing of a  bankruptcy petition in most cases operates as an “automatic stay” that  essentially prohibits most creditors from taking any action to attempt to  collect a debt pending the resolution of the bankruptcy proceeding.  Individuals usually file for bankruptcy under one of two chapters— Chapter 7 or 13—of the Bankruptcy Code. Under Chapter 7, the filer’s  eligible nonexempt assets are reduced to cash and distributed to creditors  in accordance with distribution priorities and procedures set out in the  Bankruptcy Code. Under Chapter 13, filers submit a repayment plan to the  court agreeing to pay part or all of their debts over time, usually 3 to 5  years. Upon the successful completion of both Chapter 7 and 13 cases, the  filer’s personal liability for eligible debts is discharged at the end of the  bankruptcy process, and creditors may take no further action against the  individual to collect any unpaid portion of the debt.
The U.S. bankruptcy system is complex and involves entities in both the  judicial and executive branches of government (see fig. 1).
Within the judicial branch, 90 federal bankruptcy districts have  jurisdiction over bankruptcy cases. The Judicial Conference of the United  States (Judicial Conference) serves as the judiciary’s principal policy- making body and recommends national policies and legislation on all  aspects of federal judicial administration. AOUSC is an agency within the  judicial branch and serves as the central support entity for federal courts,  including bankruptcy courts, providing a wide range of administrative,  legal, financial, management, and information technology functions. The  Director of AOUSC is supervised by the Judicial Conference. AOUSC has  developed and supports nationwide data systems to manage and maintain  information on bankruptcy cases, but these systems are largely operated,  managed, and maintained at the local courts.
Within the executive branch, the Trustee Program, a component of the  Department of Justice, oversees the administration of most bankruptcy  cases. The program consists of the Executive Office for U.S. Trustees,  which provides general policy and legal guidance, oversees operations,  and handles administrative functions, as well as 95 field offices and 21 U.S.  Trustees—federal officials charged with supervising the administration of  federal bankruptcy cases. The Trustee Program appoints and supervises  approximately 1,400 private trustees, who are not government employees,  to administer bankruptcy estates and distribute payments to creditors. To  document their administration of cases, private trustees file “final reports”  with the bankruptcy courts and submit them to the U.S. Trustees.
The procedural aspects of the bankruptcy process are governed by the  Federal Rules of Bankruptcy Procedure (Bankruptcy Rules) and local  rules of each bankruptcy court. The Bankruptcy Rules contain a set of  official forms for use in bankruptcy cases. The document filed by the  debtor to open a bankruptcy case is known as the voluntary petition,  which the debtor may amend (make changes to) at any time before the  case is closed. Most debtors who file for bankruptcy use an attorney, but  some debtors represent themselves without the aid of an attorney and are  referred to as pro se debtors. Most documents associated with bankruptcy  cases are public records and, with certain exceptions, the information  contained in a bankruptcy file is publicly accessible.
The Bankruptcy Reform Act was signed into law on April 20, 2005, and  most of its provisions became effective on October 17, 2005. The act made  substantial changes to the Bankruptcy Code, significantly changing  consumer bankruptcy practice. It also sought to address, at least in part,  long-standing concerns about perceived shortcomings of the bankruptcy  data system that had been identified by the National Bankruptcy Review  Commission and other parties. The act required the federal judiciary to  collect and report certain new aggregate statistics. It also required the  Attorney General (who delegated the authority to the Trustee Program) to  issue rules requiring that private trustees submit uniform final reports  containing prescribed information on individual bankruptcy cases.
section_title: Limitations Exist to the Availability, Accuracy, and Accessibility of Information on Consumer Bankruptcies
paragraphs: AOUSC publishes certain aggregate statistics related to the numbers of  bankruptcy filings. Documents within individual case files contain a range  of information, but few data exist on the causes of bankruptcy and the  characteristics of bankruptcy filers. There has been long-standing  recognition that much of the data in the bankruptcy system may not be  accurate—largely because much of the data is self-reported by debtors in  the official bankruptcy forms—although these data are sufficiently reliable  for the purposes of initiating a bankruptcy case. Several factors create  challenges to improving the bankruptcy data system. Most notably,  facilitating public access to data in bankruptcy files—which can contain  highly personal information—can raise privacy and security concerns. The  federal judiciary also has noted that collection of demographic or other  additional data is not its mission and would require added resources;  further, the judicial process may not be well suited to capturing certain  types of information, such as the reasons a consumer files for bankruptcy.  Bankruptcy case files are publicly accessible, but not in a format that  readily allows for compilation and analysis. The U.S. Party/Case Index was  designed to allow nationwide searches of individual bankruptcy cases, and  although it serves that function, its search parameters are limited and the  results do not include much of the data held by the system.
subsections: section_title: Limited Information Is Available on Some Characteristics of Consumer Bankruptcies
paragraphs: The judiciary reports statistics on the number of bankruptcy filings and  collects a variety of financial information from individual filers in the  official bankruptcy forms. However, relatively little information is  available on the characteristics of people who file for bankruptcy, the  factors that contributed to their bankruptcy filings, or the outcomes of  their cases.
subsections: section_title: Bankruptcy Statistics
paragraphs: AOUSC generates monthly, quarterly, and annual statistics on the numbers  of bankruptcy filings. Prior to 2008, these tables were the only statistics  the judiciary released on bankruptcies. (The new statistics required under  the Bankruptcy Reform Act are discussed later in this report.) The filing  statistics include tables that show the number of bankruptcy cases filed  for either a 12-, 3-, or 1-month period, broken down by several factors:    status of case (commenced, terminated, and pending),    circumstance of filing (voluntary or involuntary),    nature of debt (including business or nonbusiness),    median time interval from filing the petition to disposition, and    adversary proceedings (commenced, terminated, and pending).
Most of these tables include the data broken out by each judicial district as  well as by bankruptcy chapter; some of the tables include statistics by  individual bankruptcy court or county. AOUSC strives to publicly release  the quarterly and annual statistics 2 to 3 months after the close of each  quarter. Certain additional statistics used internally are not publicly  released, such as the number of cases assigned to each judge and numbers  of trials in bankruptcy courts.
The judiciary generates these statistics largely to meet its statutory  requirements to produce statistical reports for Congress and the public on  the business transacted by the bankruptcy courts. Data on numbers of  bankruptcy filings help the judiciary determine the need for resources to  operate the courts, forecast future needs, and formulate the judiciary’s  congressional budget requests. For example, data on the number of cases  opened (or filed) are one of the principal bases for determining the  number of bankruptcy judges that may be needed. The bankruptcy  statistics also receive wide attention outside of the judiciary. For example,  AOUSC’s statistical tables on the numbers of bankruptcy filings are used  by financial analysts and other government agencies as a lagging economic  indicator and reported by the mass media as a measure of the financial  health of American consumers.
section_title: Case Information
paragraphs: The files of individual bankruptcy cases—which are public documents— contain significant amounts of information. For example, the voluntary  petition used to initiate a consumer bankruptcy filing includes, among  other things, the debtor’s name and address, the estimated number of  creditors, and the estimated amount of the debtor’s assets and liabilities.  Other schedules and forms require the debtor to provide information on,  among other things: real property (real estate), personal property (such as  cash, stocks, bonds, and household items), secured debts (such as  mortgages and liens), unsecured debts (such as credit card debt and tax  obligations), monthly income, and itemized monthly expenses.
Bankruptcy case files also include other information filed with the courts.  For example, the file may contain a Chapter 13 repayment plan, which  identifies specific creditors and the amount of their claims, the monthly  repayment amount, the interest rate that the debtor and creditors have  agreed on, and the duration of the repayment plan. Similarly, case files  may include reaffirmation agreements, including the amount and  characteristics of debt being reaffirmed. Bankruptcy case files also  include final reports submitted by the private trustees that can include  information on disbursements and repayments to creditors. Finally, the  file includes the case docket that serves as a chronological record of all  significant events that occur during the case, such as motions,  applications, and court orders.
Although the official bankruptcy forms and case files include this  information, they nonetheless are limited in providing certain key  information that would help inform the nature and causes of consumer  bankruptcy. Bankruptcy files do not contain basic characteristics about  the debtor or the nature of the debtor’s circumstances, such as the  following:    Demographic information. Filers are not asked to provide their age,  gender, marital status, education, occupation, race, or ethnicity in the  bankruptcy petition and thus this information typically is not available  from the case file.
Reasons for the bankruptcy. The official bankruptcy forms do not ask for  the factors that led to the bankruptcy filing, such as job loss or divorce.  The forms also do not collect information on the specific source of debt,  such as medical bills, gambling losses, or damages from fire, theft, or  flood.
Postbankruptcy outcomes. No component of the bankruptcy system  collects information once a discharge has been granted and a case is  closed. As a result, the bankruptcy system does not have data on such  things as the financial status of debtors subsequent to the discharge of  their debt, including the accumulation of new debt.
As a result, the bankruptcy system provides limited information on who is  filing for bankruptcy, why they are filing, and the long-term results of  these bankruptcies—all of which can be important in identifying economic  and social trends and understanding the impact that bankruptcy may have  on families and communities. While this information may be important for  public policy purposes, it is not collected as part of the bankruptcy  process primarily because it is not information needed by the judiciary or  Trustee Program to operate the bankruptcy system.
To a limited extent, some nongovernmental entities collect information on  consumer bankruptcies. For example, since 1981, the Consumer  Bankruptcy Project, an ongoing research effort involving several  universities, has gathered information from bankruptcy filers through case  file reviews, surveys, and interviews on such things as educational levels,  housing, physical health, employment, and reasons for filing for  bankruptcy. The project has produced empirical studies of the  demographic and financial characteristics of consumer bankruptcy  debtors based on samples of Chapter 7 and Chapter 13 petitions filed in  1981, 1991, 2001, and 2007. In addition, the National Data Center, a  nonprofit organization, collects case and claims information directly from  Chapter 13 trustees, which it consolidates into a database that is used by  parties of interest, such as creditors, trustees, and debtors and their  attorneys.
In the years leading to the enactment of the Bankruptcy Reform Act in  2005, there was significant debate among policymakers, creditors,  consumer advocates, and other stakeholders on the factors contributing to  the rising rate of consumer bankruptcy, including the relative roles of  illness, joblessness, and divorce. While some studies, such as those  produced by the Consumer Bankruptcy Project, have examined these  issues, it was widely acknowledged that not enough data were available  from the bankruptcy system and other sources to help fully inform these  discussions. Similarly, in recent work that GAO has conducted examining  the bankruptcy system, we have found that limitations in available data  have hindered our ability to answer questions of interest to congressional  requesters. For example, in October 2007, we reported that information  available from the bankruptcy system was not sufficient to allow us to  evaluate the impact of the Bankruptcy Reform Act on child support  obligations. Further, in our December 2007 report on debtors’ use of  reaffirmation agreements, we examined a representative sample of  bankruptcy files in five bankruptcy courts, but were unable to do a  nationally representative sample because the necessary data needed to be  manually extracted from individual databases at the district level.
section_title: Some Bankruptcy Data Are Not Always Accurate
paragraphs: There has been long-standing recognition that much of the data in the  bankruptcy system may not be accurate, largely because much of the data  is self-reported by debtors in the official bankruptcy forms. For example:    The report of the National Bankruptcy Review Commission noted  persistent problems with the accuracy of bankruptcy data, pointing out  that data extracted from the debtors’ petitions and reported to AOUSC  often are inconsistent with other information contained in the same  debtors’ schedules and statements of financial affairs.
The Trustee Program’s audits of Chapter 7 and Chapter 13 debtors in fiscal  year 2007 identified at least one material misstatement of income,  expenditures, or assets in 30 percent of the cases for which audit reports  were filed.
A 1999 study of the consistency and completeness of 200 randomly  selected consumer bankruptcy cases in a Michigan district found “errors  and problems” in 99 percent of the cases, with an average of three  mistakes per case. A 2002 study of 103 consumer asset cases in the same  district found that 41 percent of cases had assets that had not been  disclosed by debtors in their initial bankruptcy papers.
A key reason why information in bankruptcy cases may be inaccurate is  that it is largely self-reported by the debtor. Filers and bankruptcy petition  preparers must attest, under penalty of perjury, that the information they  provide is correct and true. Nonetheless, as seen above, ample evidence  indicates that debtors filing a bankruptcy petition do not always  accurately estimate, for example, their debts, the value of their assets, and  other key information. The unreliability of self-reported data in  bankruptcy files is a result of several factors, according to AOUSC staff,  private trustees, and academic experts we spoke with. First, individuals  entering bankruptcy often have not kept good financial records, a fact that  may hinder their ability to provide accurate information. Second, some  portion of debtors file for bankruptcy without the assistance of an  attorney and their unfamiliarity with the process increases the likelihood  they will make errors on the forms. Third, there is little incentive for any  party to ensure that certain information is precisely accurate if that  information will not affect the outcome of the case. For example, in  Chapter 7 cases that involve no eligible assets to be distributed to  creditors, calculating the precise amount of a debtor’s liabilities makes  little difference since all eligible debt will be discharged anyway. As such,  the impact of data in bankruptcy forms that is less than fully accurate  varies depending on how the information is being used. The data may be  problematic for the purposes of research or the collection of statistics, but  are still sufficiently reliable for the purposes of initiating a bankruptcy  case.
In every consumer bankruptcy case, the private trustee submits to the  Trustee Program a “final report” that details the administration of the  estate. The Trustee Program reviews these reports and they are then filed  with the court. The information in these final reports is generally more  accurate than information in the petition and supporting forms, for two  primary reasons. First, the trustee has certain responsibilities to review  and verify some of the financial information submitted by the debtor.  Second, the final report is generated near the end of the bankruptcy  process, when more accurate information may be available, whereas the  petition is submitted by the debtor at the beginning of the process. At the  same time, the scope of the information contained in the trustee final  reports is limited—largely to data related to disbursements and  repayments to creditors.
Some parties have expressed concerns about the measurement of  consumer versus business bankruptcies. The Bankruptcy Code defines  consumer (nonbusiness) debt as that incurred by an individual primarily  for a personal, family, or household purpose. If the debtor is a  corporation or partnership, or if debt related to the operation of a business  predominates, AOUSC defines the nature of the debt as business. Debtors  self-report in the bankruptcy petition whether their debts are primarily  consumer or business debts, but such a determination can be ambiguous.  For example, certain debtors—such as entrepreneurs, small businesses,  self-employed individuals, and independent contractors—may have  difficulty determining the predominant nature of their debts if their  personal and business liabilities are closely intertwined. In the 2005 study,  “The Myth of the Disappearing Business Bankruptcy,” the authors  concluded that AOUSC statistics significantly undercount the number of  business bankruptcies, which they said may lead policymakers and others  to draw inappropriate conclusions about trends in business successes and  failures and other important policy issues. AOUSC officials told us that  the appropriate definition of whether a debtor is a consumer or a business  is open to question, but that the classification used in their statistics—the  predominant nature of the debt as reported by the debtor—has a statutory  basis.
section_title: Various Factors Affect the Ability to Expand the Data Available from the Bankruptcy System
paragraphs: The concerns that exist today about the data available from the  bankruptcy system have existed for decades. For example, interest in  more detailed, accurate, and reliable information was raised by both the  1973 and 1997 federal bankruptcy commissions. While opportunities may  exist to further expand and improve the data available from the  bankruptcy system, several factors create challenges to making such  improvements.
Public accessibility must balance privacy and security concerns.  Bankruptcy files can contain personal information such as tax and  financial data or documents from creditors that may reveal such things as  a filer’s medical circumstances or gambling history. In the past, accessing  bankruptcy records required physically retrieving files from a courthouse.  However, with the development of the Internet, personal information can  be readily and quickly accessed from anywhere in the world, raising  privacy concerns. Further, some consumer groups, bankruptcy attorneys,  and representatives of the judiciary have raised concerns that increasing  electronic access to bankruptcy data, such as through data-enabled forms,  could facilitate identity theft or the use of personal data to target  bankruptcy filers for potentially exploitative financial products or  services. In 2003 and 2007, bankruptcy rules were amended to restrict the  publicly accessible personal information in bankruptcy files. For  example, only the last four digits of a Social Security number are required  in the bankruptcy petition and bankruptcy filers may redact personal  identifiers, such as dates of birth and names of minors, from electronic or  paper filings made with the court. AOUSC officials told us that if  substantial additional bankruptcy information were to be made publicly  available, the privacy and security rules themselves might have to be  reconsidered to provide additional protections.
Collection of demographic and other additional data is not the  judiciary’s mission. The basic mission of the federal courts is to interpret  and apply the law to resolve disputes. AOUSC officials told us that while  the bankruptcy courts have certain statutory requirements to maintain an  accurate public record of case proceedings, they have no such  requirements, or any need, to collect demographic or financial data that  are unrelated to the operations of the courts. As such, the judiciary  historically has been reluctant to devote resources to collecting data solely  for research and policy purposes.
Resources are limited. Improving the judiciary’s data collection and  statistical infrastructure can require additional resources for such things  as equipment, staff, and training. AOUSC officials noted that their current  resources for information technology, data collection, and statistical  reporting were limited and would not be able to readily accommodate  additional responsibilities.
Local courts’ autonomy can hinder centralized data collection. All  bankruptcy courts are governed by certain national rules and requirements  and must report certain standard data to AOUSC. However, individual  courts also have a significant degree of autonomy to develop their own  local rules and requirements, and local practices and procedures vary.  Further, each individual district manages its own data systems and can  choose to track additional data according to its preferences. The  traditional autonomy of the 90 individual bankruptcy districts can create  challenges for AOUSC in ensuring that processes are followed uniformly  and data are collected in a consistent fashion.
The bankruptcy process is not wellsuited to collecting certain types of  information. The factors that result in a bankruptcy—a key public policy  issue—are inherently hard to capture in a bankruptcy form. Bankruptcy  petitions include a list of creditors but do not necessarily provide insight  as to the source of the debt—for example, credit card debt may derive  from medical expenses or from a costly vacation. Moreover, bankruptcy  often results from multiple factors that can be difficult to isolate (e.g., both  unemployment and poor financial management may be factors). Further,  because the courts’ formal role generally ends once a case is closed, the  courts are not in a position to collect data about the long-term impact of  bankruptcies. As a result of these factors, the judicial process may not be  well-suited to collecting certain key information, which may instead best  be obtained, for example, by private parties conducting one-on-one  interviews with debtors.
Collecting demographic data poses concerns. Key demographic  information about bankruptcy filers—such as gender, age, and race—is of  interest to policymakers and others, but may not be appropriate for  inclusion in official bankruptcy forms. Some worry, for example, that  formalized collection of this information could introduce the appearance  of bias or facilitate discrimination.
section_title: Bankruptcy Data Are Not Always Easily or Fully Accessible
paragraphs: The federal judiciary uses several major data systems to collect, manage,  and disseminate information about bankruptcies.
The Case Management/Electronic Case Files (CM/ECF) system is used by  nearly all U.S. district, bankruptcy, and appellate courts to manage and  track cases. AOUSC requires all bankruptcy courts to maintain certain  uniform pieces of information in CM/ECF—including debtor name and  case number, county, filing date, and disposition of the case—but  individual bankruptcy courts can customize the system to facilitate its  functions under local rules and local practices and procedures. CM/ECF  permits bankruptcy participants, such as attorneys and trustees, to  electronically file documents with the court.
The U.S. Party/Case Index is a nationwide locator for U.S. district,  bankruptcy, and appellate courts, which can be used by the public to  search for individual case filings, including bankruptcy filings. Certain  bankruptcy data are obtained from the courts’ CM/ECF systems on a daily  basis, and the index allows searches based on case identifiers such as a  filer’s name or Social Security number. The index can be used to search  all courts nationwide, or to search by judicial circuit, state, or district.  Bankruptcy court staff use the index to determine if an individual has filed  a bankruptcy petition in other judicial districts. Other parties, such as  attorneys and creditors, use the system to determine if an individual is  party to any judicial case.
The Public Access to Court Electronic Records (PACER) system serves as  the portal through which the public can access, via the Internet, individual  courts’ CM/ECF systems and the U.S. Party/Case Index. For any given  bankruptcy case, a user can retrieve the docket sheet and hyperlinks to  nearly all of the case’s documents, including the petition and supporting  forms and schedules. Prior to about 2001, parties interested in obtaining  bankruptcy files typically needed to physically visit the court where a  debtor filed a petition and request hard copies of documents associated  with the case. In addition to case documents, PACER also allows a user to  retrieve case-related data from CM/ECF. Users of PACER are charged 8  cents a page.
At the Trustee Program, the Automated Case Management System  functions as the internal case management system used by the agency to  carry out its responsibilities, including supervising the administration of  cases and private trustees. The system, which is not available to the  public, includes information on such things as case status and the names  of attorneys and the trustee assigned, as well as a history of case hearings,  reports, pleadings, appointments, and fees. Some of the information in the  system is obtained from individual courts’ CM/ECF systems, while other  information is entered by the Trustee Program itself.
Some nongovernmental entities also maintain information on consumer  bankruptcies that has been obtained from the courts. For example,  Automated Access to Court Electronic Records, a private company, uses  PACER to extract information from individual courts’ CM/ECF systems  and, for a fee, repackages the data to meet the needs of lenders, attorneys,  researchers, and other clients.
subsections: section_title: Information in Case Files Is Not Easily Extracted
paragraphs: The bankruptcy petitions, schedules, and other documents available via  PACER are provided in a PDF format that is essentially a snapshot image  of the document. Thus, the data cannot easily be electronically extracted  and transferred to another format for compilation and analysis. As a result,  examining the data contained in multiple bankruptcy cases can be time  consuming and costly. It involves—for each individual bankruptcy case— locating and accessing the electronic case file in the relevant court’s  CM/ECF system; identifying the document that contains the desired pieces  of information; and manually extracting the data into a database or  spreadsheet format. PACER’s fee of 8 cents per page also can inhibit the  collection of information from a large number of cases.
To facilitate the use of the data held in bankruptcy files, the judiciary and  the Trustee Program have been exploring for several years the use of  “data-enabled” bankruptcy forms. Data-enabled forms contain embedded  data tags that are invisible to the user. The tags allow a computer system  to automatically extract the tagged data, as well as categorize it so that the  information can be compared and analyzed. In 2004, AOUSC and the  Trustee Program began discussions on using data-enabled forms for  bankruptcy filing documents, which would allow the data in those  documents to be more easily extracted. In September 2006, the Trustee  Program formally requested that the judiciary mandate data-enabled forms  through a required technical standard for certain documents filed  electronically in the bankruptcy courts. In March 2008, the judiciary  declined to mandate data-enabled forms, but said it was examining  alternatives that would still facilitate automated case review.
The Trustee Program and other parties—including some judges,  researchers, and private trustees—have said that the use of data-enabled  forms would be beneficial for several reasons. First, data-enabled forms  would greatly reduce the number of hours the Trustee Program and other  parties devote to manual data entry. Second, it would allow for more  efficient collection of bankruptcy data, compilation of national bankruptcy  statistics, and analysis of the bankruptcy system. Third, they say, data- enabled forms would allow the Trustee Program to conduct its work more  effectively and efficiently. For example, a study prepared for the National  Institute of Justice—the research, development, and evaluation agency of  the Department of Justice—concluded that implementing data-enabled  forms would be an important step toward improving the Trustee  Program’s ability to fight bankruptcy fraud and abuse by facilitating  statistical fraud detection. Similarly, the Trustee Program has noted that  data-enabled forms would allow it to more efficiently administer the  “means test” by allowing it to automatically sort cases by whether debtors  are above or below the applicable state median income.
The judiciary has raised concerns about implementing data-enabled  bankruptcy forms. AOUSC officials have said the technology for data- enabled forms must be compatible with the current information system  and the electronic and hard copy documents should be identical to comply  with rules of court procedures and record-keeping standards. Further, the  judiciary, certain attorneys, and software vendors have raised potential  privacy and security concerns—for example, that data-enabled forms  could make it easier to collect personal information and use it for  marketing or undesirable purposes. Finally, the judiciary also has  expressed concerns that developing and implementing the forms would  impose higher costs on the judiciary, attorneys, and debtors and  potentially could limit access to bankruptcy court. For example, pro se  debtors may not have access to the data-enabled bankruptcy software  needed to file a petition.
In January 2008, the Judicial Conference’s Advisory Committee on  Bankruptcy Rules established the Bankruptcy Forms Modernization  Project to review and revise the official bankruptcy forms. The project,  which is expected to last 5 to 7 years, is evaluating technologies that the  judiciary could adopt to facilitate the collection, analysis, and  dissemination of information collected via the forms. AOUSC officials told  us that while the project’s ultimate recommendations will give priority to  the requirements of the judiciary, it also will take into consideration the  views and needs of external stakeholders, such as policymakers and  researchers.
section_title: Broader Access to Existing Nationwide Data Could Be Beneficial
paragraphs: Information about bankruptcy cases can be accessed by the public from  individual courts’ CM/ECF data systems. For example, a user can search  for cases filed in a specific district within a certain time frame and then  generate a data file that contains up-to-date information on cases—such as  date and chapter of filing, whether the case involves assets, and the  disposition of the case. There is no mechanism to conduct a single  nationwide search across all 90 districts’ CM/ECF systems. Instead, to  conduct a nationwide search, a user must replicate the search in each  district’s system. As a result, conducting large-scale studies of bankruptcy  cases nationwide can be difficult since the CM/ECF systems cannot readily  be used to generate a national sample of cases.
The U.S. Party/Case Index, by contrast, can be used to search nationwide  for individual bankruptcy cases. To conduct a search, a name, Social  Security number, tax identification number, or case number must be  entered. However, the index does not allow a user to search using the  other data elements it maintains, such as chapter of filing or disposition of  the case. Further, not all of the data maintained in the index are made  publicly available in the search results. When a search is conducted in the  U.S. Party/Case Index, the results for a given bankruptcy case include the  name of the filer, the case number, and the chapter filed. However, the  results do not show other case information held in the system, such as key  dates and the disposition of the case. In addition, presently the U.S.  Party/Case Index provides the results of its searches as a text file rather  than a data set. As a result, the output the system provides cannot readily  be imported into a database for further sorting and analysis.
A range of bankruptcy stakeholders, including some judges, researchers,  and Trustee Program staff, have suggested improving public access to data  that already exist in the judiciary’s data systems. One possible mechanism  for doing so might be expanding the search and output capability of the  U.S. Party/Case Index, which could enhance the ability to assess and  understand the characteristics and outcomes of consumer bankruptcies.  For example, it could facilitate the ability to draw a nationwide sample of  cases, which is useful in gathering and analyzing real-time information that  is representative of the entire country rather than specific districts. It also  could facilitate further analysis of certain case dispositions—for example,  one could identify Chapter 13 cases that were dismissed for failure to  make payments. Moreover, expanding public access to data held in the  system would be consistent with recommendations made by the 1997  National Bankruptcy Review Commission and section 604 of the  Bankruptcy Reform Act (discussed later in this report), both of which  called for a national policy of releasing the maximum amount of  bankruptcy data in a usable electronic form, albeit subject to appropriate  privacy safeguards.
Further examination would be needed before it could be determined  whether expansion of the U.S. Party/Case Index would indeed be a  practicable and appropriate mechanism for facilitating public access to  real-time bankruptcy data. AOUSC staff noted that the index was designed  as a basic search mechanism for identifying if certain individuals are  parties to cases and was not intended to serve as a tool for providing a  range of data on individual cases. The staff told us that expanding the  output or search capability of the system would be technically feasible,  although it would involve network, database, and other infrastructure  costs. Moreover, as noted earlier, any measure to facilitate the availability  of bankruptcy data—much of which is personal and sensitive—also would  need to address appropriate privacy and security protections.
The Inter-University Consortium for Political and Social Research  provides free public access via its Web site to case-level data on consumer  bankruptcies provided to it by the judiciary. Data sets include numerous  variables, such as case number, chapter, assets, liabilities, and case  disposition. However, one researcher noted that this resource is of limited  use because, among other things, the data are not always up to date and  can be inconsistent from year to year. In addition, variables for such things  as assets and liabilities are provided as ranges (e.g., $0 to $50,000) rather  than as specific values, limiting their usefulness. AOUSC officials told us  that implementation of the Bankruptcy Reform Act prevented them from  providing timely data to the Inter-University Consortium over the past few  years, but that they recently provided the consortium with bankruptcy  data through fiscal year 2007. They also noted that any inconsistencies in  the data are the result of changes in the law and the data extracted. These  led to changes in data fields and codes in those fields, and the code  translations are provided to the Consortium with the data sets.
section_title: Bankruptcy Reform Act’s Data Requirements Provide Some Benefits, but Several Factors Limit the Usefulness of the Data
paragraphs: The Bankruptcy Reform Act required AOUSC to compile and report  certain statistics on consumer bankruptcy cases on an annual basis, and it  required the Trustee Program to require uniform forms for the final  reports submitted by private trustees at the end of each bankruptcy case.  These new data requirements will provide some additional information  that may be useful in understanding the characteristics and outcomes of  consumer bankruptcy cases and how such cases vary across different  regions of the country. However, the usefulness of these data is limited for  several reasons. For example, the annual statistics are aggregated, which  limits what the information conveys, and the scope of what is provided by  some of the specific data elements is relatively narrow. Despite these  limitations, many bankruptcy stakeholders believe it would be beneficial  for the judiciary to publicly release the raw, case-level data underlying the  statistics required by the Bankruptcy Reform Act.
subsections: section_title: The Bankruptcy Reform Act Requires Additional Bankruptcy Statistics and Uniform Final Reports
paragraphs: The Bankruptcy Reform Act included new requirements that were  intended to improve the availability of information about consumer  bankruptcies. The data provisions of the act stemmed from the long- standing concern among policymakers about the need for more detailed  and reliable information about the bankruptcy system. In large part, the  provisions reflected recommendations and specific data needs identified  by the 1997 National Bankruptcy Review Commission.
subsections: section_title: Required Annual Statistics
paragraphs: The Bankruptcy Reform Act requires each bankruptcy court to collect  certain statistics for Chapter 7, Chapter 11, and Chapter 13 bankruptcy  cases filed by individuals with primarily consumer debts. The act also  requires the director of AOUSC to prescribe a standardized format for  these statistics, compile the statistics collected by the courts, make them  publicly available, and submit to Congress a report and analysis of this  information no later than July 1, 2008, and annually thereafter. The act  required each of these data elements to be reported in the aggregate and  by district, as well as itemized by chapter. As shown in table 1, the  required statistics provide information about a variety of characteristics  and outcomes of consumer bankruptcy cases. On June 23, 2008, AOUSC  issued its first annual statistical report to Congress, meeting its statutory  deadline. The report comprised a summary of findings, a discussion of the  methodology of data collection and the limitations of the data, and 21  tables presenting the required statistics, itemized by chapter and presented  in the aggregate and for each district.
The data systems the judiciary had in place when the Bankruptcy Reform  Act was enacted did not capture all of the new data required for reporting  purposes, and those data systems were not capable of collecting and  reporting all such data. The judiciary undertook several major initiatives to  meet its new reporting responsibilities under the act. For example,  the official bankruptcy forms were modified to capture certain new data  elements needed to generate the new statistics;   new procedures were developed for bankruptcy courts to collect the  the electronic case management system, CM/ECF, was modified to capture  new data elements;   bankruptcy court staff received training on the modifications to the data  systems and procedures; and   a new statistical infrastructure was built to collect, store, and produce the  new statistics, and the new statistical tables were designed and developed.
AOUSC officials said they struggled to implement these changes using  existing funding and staffing resources, noting that the judiciary received  no additional funding from Congress to meet the new statistical  requirements. They said that many other projects had to be deferred as  personnel and resources were diverted to meet the Bankruptcy Reform  Act’s data requirements. As of December 2007, the judiciary estimated it  had spent $2.8 million to implement its statistical and reporting  responsibilities under the act.
section_title: Uniform Final Reports
paragraphs: The Bankruptcy Reform Act required the Attorney General—who  delegated this responsibility to the Trustee Program—to issue, within a  reasonable amount of time, rules requiring uniform forms for the final  reports that private trustees submit for each Chapter 7, Chapter 12, and  Chapter 13 case. The act indicated that the forms should be designed to  facilitate compilation of data and maximum possible public access, both  physical and electronic. It also indicated that in developing the forms, the  Attorney General shall strike a balance between the need for public  information, undue burden on the private trustees who must generate the  forms, and privacy concerns.
Although trustees filed final reports prior to the Bankruptcy Reform Act to  document their administration of cases, there were more than 100  different versions of the reporting forms in use across the country,  according to the Trustee Program. Under the act, a uniform set of forms  must be used, and these forms must include certain prescribed data  elements, as shown in table 2. Some of these data elements had already  been provided in at least some trustees’ final reports, while others are  new.
In 2005, the Trustee Program began developing drafts of the uniform final  report forms after reviewing samples of the forms that were already being  used in various bankruptcy courts. The program sought feedback on the  draft forms from professional associations representing Chapter 7 and  Chapter 13 private trustees and from vendors of software used by these  trustees. On February 4, 2008, the Trustee Program issued a notice of  proposed rulemaking and publicly released drafts of the uniform forms for  Chapter 7 and Chapter 13 trustees’ final reports. The Trustee Program  received approximately 70 comments from private trustees, attorneys, and  others on the proposed rule and draft forms. On October 7, 2008, the  program issued a final rule that will become effective on April 1, 2009, at  which time the trustees will be required to use the uniform forms for  submitting their final reports for each consumer bankruptcy case. The  final rule incorporated changes that reduce the burden on private trustees.  For example, final reports for Chapter 7 no-asset cases will not be  separate documents, but rather can be completed electronically as a  virtual entry form in the court’s docket.
section_title: Electronic Availability of Data
paragraphs: Section 604 of the act does not impose any requirements but rather  expresses the “sense of Congress” that:  the national policy of the United States should be that all public record  data maintained by bankruptcy clerks in electronic form should be  released in bulk to the public in a usable electronic form,  the bankruptcy data system should use a single set of data definitions and  forms to collect data nationwide, and   data for each bankruptcy case should be “aggregated in the same  electronic record.”
The statutory language reflects almost verbatim two recommendations of  the 1997 report of the National Bankruptcy Review Commission. That  report noted that the wealth of data generated by the bankruptcy system  should be available for systematic study by making it available to the  public electronically, to the extent practical. Bankruptcy stakeholders  have expressed varying interpretations of section 604. The Judicial  Conference’s Committee on the Administration of the Bankruptcy System  noted in a March 2008 report that the judiciary already addresses many of  the issues raised in these provisions—such as by providing public access  to court electronic records through PACER. At the same time, two  academic researchers we spoke with noted that case files available  through PACER files are largely PDF image files and expressed the  opinion that in accordance with section 604, the judiciary should expedite  efforts to make case-level data accessible in an extractable database  format that could be used more readily for compilation and analysis.
section_title: The New Data Requirements Will Provide Some Additional Information about Consumer Bankruptcies
paragraphs: The new annual statistics and the uniform final reports required under the  Bankruptcy Reform Act will provide some additional information that may  be useful in understanding the characteristics of consumer bankruptcy  cases and differences among such cases across the country.
subsections: section_title: Annual Statistics
paragraphs: The new annual statistics required by the Bankruptcy Reform Act provide  Congress, the judiciary, the Trustee Program, and the public with a variety  of new information on certain characteristics and outcomes of consumer  bankruptcy cases. Prior to 2008, the bankruptcy statistics produced by the  judiciary consisted primarily of information related to the numbers of  filings, as noted earlier. The new statistics provide, for the first time,  comprehensive statistics on certain aspects of consumer bankruptcies and  on the debtors themselves that may provide a better understanding of the  trends in, basis for, and impact of bankruptcy filings.
While these data have significant limitations, some bankruptcy  stakeholders identified specific ways these new statistics might be  revealing or useful. For example, Trustee Program staff and two judges we  spoke with said that the statistics could be useful for identifying  differences across districts or regions of the country in the outcomes of  cases or the characteristics of bankruptcy filers, such as their assets,  liabilities, and income. In addition, an academic researcher noted that the  statistics could reveal differences in the legal process or local legal culture  in different districts. Similarly, Trustee Program staff noted that certain  data on Chapter 13 case outcomes—such as the number of repeat filers,  cases dismissed, and cases in which a repayment plan was completed— could provide practical information on how Chapter 13 practices differ  across the country.
The new statistics also will provide some useful information on the  average debtor’s financial circumstances. For example, one researcher  noted that the statistics on median debtor income and expenses could  provide useful information about the profile of the typical filer. Another  researcher told us that the new statistics could be used to calculate debt- to-income ratios and track changes in these ratios over time to examine  changes in the typical profile of debtors. Further, comparisons of debtors’  current monthly incomes with their average incomes in the previous 6  months could provide a better understanding of how their financial  situations changed in the period leading up to the bankruptcy filing.
Some Trustee Program officials, judges, and bankruptcy court clerks said  that some of the new data also may be beneficial in conducting their  internal operations. For example, Trustee Program officials said these data  could potentially help assess the efficiency of its regional offices. In  addition, the four bankruptcy judges we spoke with said that the statistics  on the outcomes of Chapter 13 cases will provide useful information for  their administration of these types of cases.
section_title: Uniform Final Reports
paragraphs: The Trustee Program will require trustees filing the uniform final reports  for Chapter 13 cases and for Chapter 7 asset cases to use a “smart form”  that is data enabled. As discussed earlier, data entered into these data- enabled forms are “tagged,” and these tags are then available for  extraction and searching capability. This data-enabled format will  facilitate compilation and analysis of the information the forms include,  and it aligns with the sense of Congress expressed in section 604 that  bankruptcy data should be released in a usable electronic form. Staff from  a Trustee Program regional office told us that the data-enabled format  would make it easier for regional staff to compile the distribution statistics  on receipts and disbursements that they already generate for internal  program use. The format also might allow easy extraction of information  from large numbers of forms for research purposes that could inform  policy making. Some bankruptcy researchers we spoke with told us they  had not used trustees’ final reports in the past but noted that the new data- enabled format of the trustees’ reports would make the reports a potential  research tool.
The use of a single set of standard forms should improve the consistency  of the data included in the reports. According to Trustee Program staff, the  uniform forms should facilitate any analysis that may be conducted,  particularly across districts. The Trustee Program staff said that the new  final reports also may aid their oversight of private trustees. For example,  comparisons of such things as administrative expenses and distributions  to creditors could be used to evaluate the efficiency and effectiveness of  trustees.
Because the act requires the uniform final reports to include specific new  data elements, the reports will provide additional information about  consumer bankruptcy cases—particularly for Chapter 7 no-asset cases,  whose final reports previously contained little to no data. In its rule, the  Trustee Program noted that the new reports will assist Congress in  compiling data to accurately analyze bankruptcy trends when making  policy decisions. Trustee Program staff we spoke with cited some specific  ways the data potentially could be used to inform policy making. For  example, the new final reports will include data on the amount of “assets  exempted”—that is, those assets that are shielded from unsecured  creditors by fully or partially exempting them from the property of the  bankruptcy estate. This information could be used with data on  “distributions to claimants” to show the effects of various exemption rules  on the availability of funds to make payments to creditors. (In some states,  bankruptcy filers have the option to use federal or state exemption rules.)  The data also could provide information on the relative effects of  bankruptcies on creditors through a comparison of the amount of  distributions to claimants with the amount of debt discharged.
section_title: Several Factors Limit the Usefulness of the New Bankruptcy Data
paragraphs: Our review found that although the data requirements of the act will  provide some additional information about consumer bankruptcies, their  usefulness is limited for several reasons.
Content. The new data do not, nor were they intended to, provide  significant information about some of the characteristics of consumer  bankruptcies that are of key interest to policy makers—most notably, the  reasons consumers filed for bankruptcy, the nature or source of the debts,  and the demographic characteristics of the filers. As noted earlier, this  type of information is very difficult to capture through the formal  bankruptcy system.
Aggregation. The data reported by the judiciary are provided in the  aggregate as statistics—rather than as case-level data—limiting the value  of the information, according to some Trustee Program staff, researchers,  and judges we spoke with. Aggregated numbers do not allow researchers  and policy makers to drill down into the data to gain an understanding of  the bankruptcy system. For example, an academic researcher we spoke  with noted that “total assets” and “total liabilities” in the aggregate do not  provide a useful picture of the average debtor’s financial situation.
Narrow scope. The scope of what is provided by some of the specific data  elements is relatively narrow. For example, the act requires the judiciary  to report the number of cases in which creditors were “fined for  misconduct.” However, because courts may reprimand creditors in a  variety of ways, this statistic provides only a limited picture of sanctions  imposed against creditors in bankruptcy courts.
Lack of specificity. Alternatively, some statistics are so broad in what is  included that the usefulness of the data is unclear. For example, the act  requires that the judiciary report “total assets,” but this does not  distinguish between net assets and assets with liens attached (such as a  home with a mortgage). Further, total assets includes assets that are  shielded from unsecured creditors, as defined by federal and state  exemption laws. As such, the statistic will not be an accurate indicator of  debtors’ net worth or of the amount of equity that can actually be  liquidated and distributed to creditors.
Accuracy. Much of the data in the new annual statistics is based on  information that debtors provide when submitting forms, schedules,  motions, and other court filings. As noted in AOUSC’s statistical report,  self-reported data may be incomplete or inaccurate. For example, as  described earlier, debtors do not always correctly designate whether their  debts are primarily consumer versus business debt, and thus the new  statistics may include some business cases that have been incorrectly  designated as consumer cases. Similarly, certain data in the new trustee  final reports are derived from information provided by the debtor in the  bankruptcy forms.
Definitional issues. Certain definitional issues may limit the usefulness of  some of the specific data elements in the statistical requirements and  uniform final reports. For example:   The Bankruptcy Reform Act requires reporting on “the aggregate  amount of debt discharged,” but the definition provided in the act does  not, in fact, represent the amount of debt actually discharged in  bankruptcy, according to AOUSC officials and legal experts we spoke  with. In addition, included in this statistic are debts with enforceable  liens (such as mortgages on real property). As a result, the statistic  does not provide a true picture of the amount of debt eliminated in  consumer bankruptcies, which can be a useful macroeconomic  indicator.
The act requires that uniform final reports include “assets  abandoned”—assets that are not liquidated or distributed because they  are of little value or benefit or might be too burdensome. The Trustee  Program defines assets abandoned for no-asset Chapter 7 cases as the  current value of real and personal property on the debtor’s schedules  less the total value of exemptions the debtor claimed. Under this  definition, the data could include assets secured by reaffirmed debts,  which are not actually abandoned.
The act also requires the uniform final reports to include “claims  discharged without payment,” which the Trustee Program defines for  Chapter 7 no-asset cases as the sum of the claims listed by debtors on  their official filing forms. Some private trustees have noted that not all  claims listed by the debtors are actually discharged without payment— for example, the value of reaffirmed debts and nondischargeable  categories of debt such as domestic support obligations and secured  claims. As a result, this data element may not provide meaningful  information on the amount of debts discharged without payments to  creditors in Chapter 7 no-asset cases.
Trustee Program officials told us they believed their definitions strike the  best achievable balance between the reasonable need of the public for  information and the burden of reporting placed on trustees. With regard  to the definition of “assets abandoned,” they noted that requiring trustees  to determine which debts had been reaffirmed would cause additional  burden on trustees and delays in closing cases. With regard to “claims  discharged without payment,” they noted that (1) trustees usually file a no- asset report before the expiration of a creditor’s deadline for objecting to  the dischargeability of a debt, and (2) the Bankruptcy Code provides that  certain debts are not discharged regardless of how they are scheduled by  the debtor. As a result, program officials told us, their definition provides  information about the amount of claims that have been scheduled to be  discharged while allowing trustees to expeditiously close no-asset cases  without waiting for the objection deadline to pass and without requiring  the trustee to make an independent determination as to which of the debts  listed by the debtor are dischargeable.
section_title: Releasing Case-Level Data Used for Bankruptcy Reform Act Statistics Could Be Beneficial
paragraphs: AOUSC currently has no plans to provide public access to the raw, case- level data used to generate the statistics required by the Bankruptcy  Reform Act. A variety of stakeholders in the bankruptcy process told us  that these case-level data would be useful—despite their limitations—if  made publicly available as a data set. For example, two researchers told us  that the case-level data would permit additional analyses, such as  determinations of statistically significant differences among groups of  debtors. The case-level data also would allow the creation of statistics  aggregated by categories other than state and judicial district, and also  would permit examination of the variability of debtors’ income, assets, and  liabilities. A representative of a financial services trade association noted  that creditors could use the data to refine their risk models by analyzing  the characteristics of filers to determine the likelihood that particular  debtors will repay their debts. In addition, Trustee Program staff noted  that case-level data on the time elapsed between the filing and closing of  cases could be useful in comparing how quickly individual trustees  administer cases. Further, several bankruptcy judges we spoke with  suggested that case-level data could be useful, in particular, in  understanding the characteristics of Chapter 13 cases and the degree to  which they have successful outcomes.
An AOUSC official noted that the data underlying the new statistics were  of uncertain quality and that it would therefore be imprudent to publicly  release these raw data until AOUSC has time to better analyze the  information. However, other stakeholders have noted that concerns about  the quality of the data underlying the statistics should not necessarily  prevent AOUSC from releasing it. Further, Trustee Program staff and a  researcher told us that access to the case-level data could enable external  parties to assess their reliability and limitations—for example, by verifying  the data against the case files in PACER and removing erroneous data  values. Others have noted that, as a general principle, government  agencies should be as transparent as possible in releasing supporting data  for public examination and assessment of the quality of the statistics  drawn from them.
AOUSC staff noted that there was no statutory requirement for releasing  the case-level data used to meet the statistical requirements of the  Bankruptcy Reform Act, and noted that doing so could raise privacy  concerns. However, providing public access to case-level data would be  consistent with section 604 of the act, which recommended as national  policy releasing in a usable form the electronic public record data held by  bankruptcy clerks. More broadly, the judiciary’s 2008 strategic plan for  information technology recognizes external parties as major consumers of  court data and includes as one of its objectives easy access to appropriate  case-related information. The plan notes, however, the need to balance  data accessibility with privacy and security concerns, pointing out that  certain types of cases, categories of information, and specific documents  may require special protection from unlimited public access.
section_title: Conclusions
paragraphs: Long-standing questions have existed about the information available on  consumer bankruptcies. While statistics are published on the numbers of  filings, little information is available on the characteristics of individuals  who file for bankruptcy or the nature and outcomes of their cases. Much  of the information that is collected during the bankruptcy process is not  readily accessible by the public in a format that allows for the extraction,  compilation, and analysis of data across multiple cases. These  shortcomings limit the ability of scholars and other parties to gather and  analyze information that would be useful in assessing the bankruptcy  system. Congress is similarly limited in its ability to make bankruptcy  policy and formulate legislation based on empirical data rather than  anecdotal evidence.
The data provisions of the Bankruptcy Reform Act were a useful step in  addressing this issue by increasing the amount of information available  and by facilitating, to some extent, its accessibility and uniformity. The  plans by the Trustee Program to use data-enabled “smart forms” for its  new final reports will enhance the utility of this new information. At the  same time, the value of certain annual statistics is likely to be limited, in  part because some of the data elements are narrow in scope and may not  provide a meaningful or comprehensive picture of the issues they address.  As further statistical reports are issued, the ultimate value and limitations  of the Bankruptcy Reform Act’s data requirements will likely become  clearer, and Congress may find it beneficial to review whether particular  data elements required would benefit from modifications that would help  ensure they are providing information useful to policy makers in assessing  the consumer bankruptcy system.
Progress has been made in recent years in making bankruptcy data more  available and accessible to various parties. However, a tension remains in  the extent to which the judiciary focuses bankruptcy data efforts solely on  internal requirements versus the needs or preferences of researchers and  policy makers. It is unclear whether it is the appropriate role of the  judicial system to collect certain kinds of additional information from the  bankruptcy process, such as the reasons people file for bankruptcy.  Nevertheless, policy makers and the public could be better served if the  judiciary took steps to further facilitate access to existing data already  collected and maintained in its systems. For example, one possible option  could be to expand the search and output capability of the U.S. Party/Case  Index to enable easier access to, and more productive use of, the full array  of data residing in this system. Similarly, despite the limitations of the  Bankruptcy Reform Act’s statistics, publicly releasing the case-level data  used to generate these statistics could be a valuable resource in efforts to  further analyze and understand consumer bankruptcies. Implementation  of data-enabled forms by the judiciary also could be beneficial by allowing  more efficient use and analysis of information collected. Before such steps  could be taken, however, certain issues would need to be resolved—such  as privacy and security concerns and the appropriate disclosure of data  limitations.
Facilitating the public access and usability of data already held in the  judiciary’s databases would be consistent with the recommendations of  the National Bankruptcy Review Commission and section 604 of the  Bankruptcy Reform Act, both of which called for a national policy of  releasing the maximum amount of bankruptcy data in a usable electronic  form. Policy makers need adequate information about the characteristics  and outcomes of bankruptcies to make sound and informed policy  choices. Better access to bankruptcy data already held in the judiciary’s  data systems could facilitate scholarly research, the informed allocation of  bankruptcy resources, and the formulation of bankruptcy policy.
section_title: Recommendation for Executive Action
paragraphs: To help provide additional information on consumer bankruptcies useful  to policy makers and others, we recommend that the Director of AOUSC  expeditiously identify and implement—subject to appropriate privacy and  security safeguards—measures to further improve public accessibility to  those bankruptcy data that AOUSC already maintains in its information  systems. For example, AOUSC might consider whether it would be  practical to expand the search and output capability of the U.S. Party/Case  Index. AOUSC also might explore appropriate options for releasing at least  some of the case-level data used to generate the Bankruptcy Reform Act  statistics.
section_title: Agency Comments
paragraphs: We provided a draft of this report to AOUSC and the Department of  Justice for comment. These agencies provided technical comments that  we incorporated as appropriate. In addition, AOUSC provided a written  response, which is reprinted in appendix II.
In its comment letter, AOUSC said it would carefully consider GAO’s  recommendation to identify and implement measures to further improve  public accessibility to bankruptcy data. The agency commented that the  judiciary already provides a high level of access to case records and  information and that over the past decade it has substantially increased  the amount of information it makes available to users of the bankruptcy  system. The agency also reiterated the need to balance access and privacy  interests in making decisions about widespread public disclosure and  dissemination of information in case files. AOUSC said that in January  2009, it will begin assessing potential enhancements to the federal  judiciary’s electronic public access services and technical interfaces, and  will consider making additional existing data available through the U.S.  Party Case/Index, as we suggested. The agency also said it will assess  issues related to releasing case-level Bankruptcy Reform Act data and will  present its recommendation to the appropriate Judicial Conference  committees.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution of it until 30 days from  the date of this letter. We will then send copies of this report to the  Ranking Member of the Committee on the Judiciary, U.S. Senate; the  Ranking Member of the Committee on the Judiciary, House of  Representatives; the Director of the Administrative Office of the United  States Courts; the Attorney General; and other interested committees and  parties. The report also is available at no charge on the GAO Web site at  http://www.gao.gov.
If you or your staffs have any questions concerning this report, please  contact me at (202) 512-6806 or jonesy@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report. GAO staff who made major contributions to this  report are listed in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our report objectives were to examine (1) the availability and accessibility  of data from the bankruptcy system and (2) the potential benefits and  limitations of the new data requirements of the Bankruptcy Abuse  Prevention and Consumer Protection Act of 2005 (Bankruptcy Reform  Act) in addressing these issues. This report focuses on consumer, or  personal, bankruptcies rather than business bankruptcies.
To address both of the objectives, we gathered documentation from and  spoke with representatives of the U.S. Trustee Program’s (Trustee  Program) Executive Office for U.S. Trustees, including units responsible  for information technology and the oversight of private trustees; two  Trustee Program regional offices; the Administrative Office of the United  States Courts (AOUSC); and selected individual bankruptcy courts,  including four bankruptcy judges and six bankruptcy clerks. We also  spoke with, and in some cases gathered documentation from,  representatives of the National Association of Bankruptcy Trustees and  National Association of Chapter 13 Trustees, two professional associations  representing Chapter 7 and Chapter 13 trustees, respectively; companies  that provide software for case management for private trustees and  bankruptcy filings for attorneys; the National Data Center and Automated  Access to Court Electronic Records, private organizations that provide  bankruptcy data for a fee; the National Association of Consumer  Bankruptcy Attorneys; the National Consumer Law Center; the American  Bankruptcy Institute; the Financial Services Roundtable; and academic  researchers who study the bankruptcy system and use the data that it  generates.
In addition, we reviewed the strategic plans for information technology  developed by the Trustee Program and AOUSC. We also reviewed  correspondence between these two parties on the potential  implementation of data-enabled forms, and reviewed public comments  they received related to this issue. We also reviewed the meeting minutes  and other documentation of relevant committees and subcommittees of  the Judicial Conference of the United States related to bankruptcy data  and data-enabled forms.
To address the first objective, we reviewed academic literature that has  used, studied, or commented on the information on consumer  bankruptcies available from the court system and the Trustee Program. In  addition, we reviewed our prior reports that have used bankruptcy data  and have identified some of the limitations of these data, including reports  related to child support enforcement and reaffirmation agreements.  Further, we reviewed materials produced by the National Bankruptcy  Review Commission. We also reviewed user guides, protocols, data  dictionaries, and other relevant information for the judiciary’s major  bankruptcy data systems, including the Public Access to Court Electronic  Records system, U.S. Party/Case Index, and Case Management/Electronic  Case Files system. In addition, we reviewed the Official Bankruptcy Forms  and visited a bankruptcy court to observe how information from the forms  is inputted into the Case Management/Electronic Case Files system.
To address the second objective, we reviewed relevant provisions of the  Bankruptcy Reform Act and some corresponding legislative history. We  also reviewed documentation on the judiciary’s implementation of the new  statistical requirements of the act, which included a tracking report  developed by AOUSC to monitor its efforts to implement the act; minutes  from the Judicial Conference’s Advisory Committee on Bankruptcy Rules;  changes to the Official Bankruptcy Forms; documents related to the  modifications made to the case management system to collect additional  data elements; training materials used to educate court staff on collecting  the new data; and documents on the initiation of the NewSTATS statistical  infrastructure.
We also reviewed documentation on the Trustee Program’s  implementation of new requirements related to uniform final reports,  including the agency’s proposed and final rules related to these reports  and draft and final versions of the agency’s report formats. In addition, we  reviewed public comment letters submitted to the Trustee Program in  response to the rulemaking and the draft reports. We also reviewed  correspondence between the Trustee Program and the judiciary related to  the addition of new data fields to the daily downloads the program  receives from AOUSC.
We conducted this performance audit from June 2007 through December  2008 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Administrative Office of the United States Courts
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jason Bromberg, Assistant  Director; Nicholas Alexander; Krista Breen Anderson; Anne A. Cangi;  Emily Chalmers; Wilfred Holloway; Angela Pun; and Omyra Ramsingh  made key contributions to this report.