Neither a college education nor a high paying job is enough to protect consumers against filing for personal bankruptcy, according to the 2010 Annual Consumer Bankruptcy Demographics Report recently released by the Institute for Financial Literacy, a national nonprofit financial education and counseling organization based in Maine.
"The Great Recession has had a dramatic impact on the bankruptcy filings of American consumers across the economic spectrum—including college-educated, high-income earners," said Leslie E. Linfield, executive director and founder of the Institute for Financial Literacy. "While less-educated, low-income individuals continue to represent the typical bankruptcy filer, this report underscores a sophisticated evolution of the profile of the American debtor that now extends to disparate age, income and ethnic groups."
The Center for Consumer Financial Research, an independent division of the Institute for Financial Literacy, collected information on gender, age, ethnicity and other factors over a five-year period from nearly 200,000 consumers seeking pre-bankruptcy credit counseling or post-bankruptcy debtor education courses throughout the United States. The Institute for Financial Literacy has published a Consumer Bankruptcy Demographics Report annually since 2005. The 2010 report provides a five-year perspective of the American debtor.
Key demographic findings include:
- College education doesn’t appear to ward off bankruptcy—the rate of degree holders filing bankruptcy increased by 20 percent.
- Bankruptcy filers earning incomes above $60,000 increased their rate of filing by more than 66 percent.
- Asian American filings have doubled while Hispanic/Latino filings increased by more than 33 percent.
- Americans age 34 and younger decreased the rate of filing bankruptcy by more than 30 percent since 2006.
- The gender gap in bankruptcy filings is closing.
- Americans who are married are more likely to file and represent more than 60 percent of all filings.
- The primary reasons for financial distress include overextension on credit, unexpected expenses, illness/injury and divorce.
View the full report.