Who should file bankruptcy?
Sample data and demographics.


The demographics of bankruptcy filers continue to change from what is was when the new bankruptcy laws took effect in 2005. Educating consumers of their legal right to file bankruptcy has been a key factor in the evolution of bankruptcy filers. However, the downturn in the economy in 2007 was a major turning point and led to a major increase in bankruptcy filings in the United States by all kinds of people.

The Institute for Financial Literacy created and published a report entitled “2010 Annual Consumer Bankruptcy Demographics Report: A Five Year Perspective of the American Debtor.” The report compares a full year of bankruptcy data in 2010 to their findings from 2006-2009. There are plenty myths and misconceptions about bankruptcy and about who files bankruptcy but this factual annual report shows exactly who the most common bankruptcy filers are. This data might come as a surprise to you.


Bankruptcy in America: Demographics of a typical bankruptcy filer in 2010:

Education

On average 56% of people filing for bankruptcy in 2010 had some college education, whether they finished the degree or not. Further, a 20% increase in filings was found among people that finished and received a higher education degree. The percentage of people that file bankruptcy with a college degree continues to increase.

Income

Over the five year period of this study, 2006-2010, people earning $66,000 or more per year increased their rate of filing by more than 66%. The average earnings of bankruptcy filers in 2010 was $40,000 or less. The trend of people filing bankruptcy with larger incomes continues to increase through 2014.

Employment

The majority of people filing bankruptcy are employed at the time of filing. During this study, The Institute for Financial Literacy found that since 2007, when the major recession began, there was a 27% increase in people filing bankruptcy while collecting unemployment.

Reasons for Filing

2013 marked the first year that medical debt was the most common reason for filing bankruptcy. Further, it was medical debt from people that did not have health insurance. These people that filed bankruptcy and stated medical debt as their main cause of financial troubles had full coverage insurance but due to high premiums and deductibles could not afford their medical costs in spite of being gainfully employed with consistent income.

In 2010, reduction of income was a cause of filing bankruptcy, which was a 24% increase from 2006. Along with reduction of income, job loss and an over extension of credit were reasons that significantly increase over the five year study.

Marriage

In 2010, about 62% of people that filed bankruptcy were married which was a 23% increase from 2006.

Gender

In 2010 more woman filed bankruptcy than men, 52.9% vs. 47.1%. It’ll be interesting to see what it’s like in 2013-2014. We’ll keep you updated on these stats.

Ethnicity

72% of people filing bankruptcy from 2006-2010 were Caucasian. However, over the five year study, The Institute for Financial Literacy found a notable 114% increase in Asian Americans and 33% increase in bankruptcy filings by Hispanics/Latinos.

An overview of a typical bankruptcy filer in 2010

A person that filed bankruptcy in 2010 would fit right into this average of all filers if they were white, married, and in their mid- to late forties. They attended and/or graduated from college. Upon filing, they were both working and earned around $40,000/year.

This overview is just to show that people filing for bankruptcy are not deadbeats. They are hardworking people with families and an education. They make the choice to file bankruptcy as a smart financial decision. They file and benefit from our law that allows a fresh start through bankruptcy and they get on with their life.

Click to view the entire 2010 Annual Consumer Bankruptcy Demographics Report: A Five Year Perspective of the American Debtor.




The Institute for Financial Literacy intends to create a study of bankruptcy demographics for 2013. We’ll keep you updated with those statistics.

For the 2012 Report of Bankruptcy Statistics, click here.


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