Regulating Bankruptcy Abuse: An Empirical Study of Consumer Exemptions Cases

This article presents the results of an empirical study of bankruptcy court doctrine in consumer exemptions proceedings over a 20‐year period. The study shows a pattern in which bankruptcy courts signal a systematic tendency to limit access to exemptions based on judicial pronouncements about debtor sophistication. The data show a correlation of as much as 78.9 percent between debtors' denial of access to exemptions and judicial pronouncement of debtors' sophistication. This systemic rule conditioning access to exemptions based on debtors' sophistication emerged endogenously, without the prompting of hierarchical, exogenous forces such as congressional or appellate court directives.