As a Boston bankruptcy lawyer who writes a bankruptcy blog, http://www.bostonbankruptcylawyerblog.com, to keep our Massachusetts bankruptcy clients appraised of the news and trends in bankruptcy law, we have come upon a fascinating new study we like to report on. The extensive research report looked at the changes in the demographics of personal bankruptcy filers since 2005 in the attempt to answer the following question: What does the person who filed for bankruptcy this year look like in comparison with those five years ago? The report was a topic of a blog post by bankruptcy attorney Richard Olson, of Perkins Olson, who practices commercial law in Portland, Maine.
The 2010 Annual Consumer Bankruptcy Demographics Report was published this month by the Institute for Financial Literacy, a non-profit with a goal of providing financial education and counseling. The report is intended to give a perspective of the five years following the new bankruptcy law, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which went into effect in October of 2005. The wealth of data “does not lend itself to drawing final conclusions,” but identifies issues and serve a basis for discussion among academic and consumer forums like our bankruptcy blog.
Among the findings are the following:
Gender Findings
1. The gap between men and women filing for personal bankruptcy is narrowing; in 2006 it was 46.4 % men and 53.6% women while in 2010 it was 47.74% men and 52.26% women.
2. Married filers increased form 57.2% to 64.10%; while single filers when from 21.8% down to 17.09%
Educational Findings
1. More than 70% of those who filed for personal bankruptcy did not graduate from college.
2. The bankruptcy rate among Americans with a college or advanced degree increased disproportionally.
3. Filers with a college education increased by 20%.
4. The rate for those that started, but did not finish, college rose significantly. This could be due to large student loans, which cannot be discharged, and inability to find employment without the expected degree.
Income Findings
1. 74.2% bankruptcy filers earn $40,000 per year or less in 2010, however, that number was 80.7% in 2006.
2. Those earning over $50,000 per year saw the greatest increase in filing rates.
3. Filers earning more than 60,000 per year increased from 5.5% to 9.18%, a dramatic increase compared to other income categories.
4. Unemployed bankruptcy filers increased by 23% following the 2008 recession.
5. Filers with incomes over $60,000 increased by 66%.
6. Unemployed filers increased by 21%.
Marital Status Findings
1. Married filers represent over 60% of bankruptcy filers, 35% were joint petition filers.
2. Married filers have increased by 12%.
Age Category Findings
1. The rate of filing among 18 to 24 year olds decreased from 3.3% to 1.33%
2. The rate of filing among 25-34 year olds decreased from 21% to 15.94%.
3. The rate of filing among people 34 and younger has decreased by 30%.
4. The rate of filing among 35 to 44 year olds decreased from 29% to 27.54%.
5. The rate of filing among 45 to 54 year olds increased from 24.9% to 28.45%.
6. Relative to the population 20 to 60 year olds have a disproportionate share of bankruptcy filers.
7. The rate of filing among people older than 45 has increased by 18%.
8. The rate of filing among 55-64 year olds increased from 14% to 18.12%.
9. The rate of filing among 65 and older folks increased from 7.8% to 9.12%.
Race/Ethnicity Findings
1. White filers decreased from 72.5% to 71.63%.
2. Black filers decreased from 15.4% to 11.30%.
3. Asian Americans have increased filing by over 100% – from 2.1% to 4.6% while Asian Americans are 4.2% of the population in 2010, bringing them in line statistically with other ethnic groups.
4. Hispanic filings increased by 33% – from 6.% % to 8.68%.
5. Native American filers decreased from 1.1% to.75%.
Causes of Financial Distress between 2006 and 2010
1. Filers overextended on credit went from 62.7% to 70.5%, the most dramatic increase.
2. Filers with unexpected expenses went from 57.1% to 56.62%.
3. Filers with a reduction in income went from 52.2% to 64.96%.
4. Filers with a job loss went from 36.1% to 43.57%.
5. Filers with illness or injury went from32.8%to 30.96%.
6. Filers with divorce as a cause went from15.5% to 15.51%.
7. Filers with the birth or adoption of a child went from 8.7% to 9.155%.
8. Filers who lost a family member through death went from 8.4% to 7.86%.
9. Filers whose cause of filing was retirement went from 2.3% to 1.85%.
10. Filers who were victims of identity theft went from 2.3% to 1.85%.