Quarterly Bankruptcy Trends: Chapter 7 vs. Chapter 13 Filing Patterns

Current Filing Environment

Bankruptcy filings have trended upward over the past year as pandemic-era relief programs wound down and consumer debt loads increased. Credit unions should expect to see increased activity in their bankruptcy portfolios.

Chapter 7 Considerations

Chapter 7 filings remain the most common bankruptcy type. For credit unions, the key considerations include:

• Timely filing of proofs of claim

• Monitoring for potential preferential transfers

• Evaluating reaffirmation agreement requests

• Coordinating with the trustee on collateral

Chapter 13 Update

Chapter 13 plan durations (typically 3-5 years) mean that credit union exposure can be prolonged. Active monitoring of plan payments and quick action when debtors fall behind on plan payments is essential.

Best Practices

• Maintain current vendor relationships — Ensure your bankruptcy counsel has current contact information and loan data.

• Automate alerts — Set up systems to flag new bankruptcy filings by members.

• Review reaffirmation policies — Make sure your policy on reaffirmation agreements reflects current legal standards and your risk tolerance.

Contact our team to discuss your credit union's bankruptcy management strategy.