Even considering filing for bankruptcy can be a very stressful time in anyone’s life. It’s hard to think about the process and what the consequences might be. The Institute for Financial Literacy just released a new study on who is filing for bankruptcy these days and I thought you might find some of the results interesting (and possibly reassuring). These statistics are for 2010 filings and the report has information for 2006-2010.
Age of Debtor
1.33% 18-24 years old
15.44% 25-34 years old
27.54% 35-44 years old
28.45% 45-54 years old
18.12% 55-64 years old
9.12% 65 years or older
From my experience, many who are 45 years are older are struggling with unemployment, medical bills, and lack of retirement savings. This group does not have a budgeting problem, but probably used credit cards to pay for living expenses while looking for a job, so high credit card balances may also be causing difficulties. In addition, many people are facing foreclosure or have multiple mortgages on underwater homes that bankruptcy can help with obtaining a better outcome.
Education Level of Debtor
6.73% Graduate Level
13.58% Bachelor’s Level
8.82% Associate’s Level
28.73% Some College Level
36.27% High School/GED Level
5.38% Primary School Level
The interesting part of these statistics is the change from 2006 to 2010. Higher educated debtors have dramatically increased as a percentage of bankruptcy filings, while those with some college or a high school diploma have decreased as a percentage of bankruptcy filings. I think we are seeing the effect of unemployment for those with degrees, in addition to high student loan debt impacting who files for bankruptcy.
Income of Debtor
38.18% Less than $20,000/year
21.35% $20,000-$30,000/year
14.67% $30,000-$40,000/year
10.05% $40,000-$50,000/year
6.56% $50,000-$60,000/year
9.18% More than $60,000/year
Again, the interesting statistic here is that the percentage of those filing for bankruptcy who make more than $60,000 has nearly doubled since 2006. This also really depends on where you live. I would say that a majority of people I meet with make over $50,000/year because of the cost of living in Northern California.
Bottom Line
People of all ages, education levels, and incomes are filing for bankruptcy because of the economy, housing values, high student loans, and lack of ability to pay everything off. Bankruptcy is not a one-size-fits-all proposition, but it is a useful and flexible tool for many different situations. If you are struggling to make ends meet and are overwhelmed by debt in California, please contact me to schedule an appointment.
This is just a basic overview and is not legal advice specific to your situation. If you are considering bankruptcy or are feeling overwhelmed by debt, you should speak with an attorney in your area for legal advice. To speak with me regarding your situation, please email me at [email protected] or call 925-586-6738.
