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Who Files Bankruptcy?

Who Files Bankruptcy?

This question is a bit harder than it looks to answer. This is because the bankruptcy court doesn’t request any demographic information when someone files bankruptcy. The court maintains up to date statistics regarding how many people file bankruptcy and where, but not much beyond that. 

This means we are left to wait for researchers to investigate this question, which seems to happen about every 10 years. 

The latest research is from a working paper, set to be published in the Georgia Law Review, titled “Portraits of Bankruptcy Filers.” It starts out with the data that 1 in 10 adult Americans has filed bankruptcy. This number can seem staggering because bankruptcy is so often not spoken about. So you don’t know that your neighbor, or family member, or co-worker has filed a bankruptcy. 

By the numbers: 

43% of bankruptcy filers owned a home at the time of filing

27% of bankruptcy filers have a bachelor degree or higher

83% of bankruptcy filers under 65 had employment income at the time of filing 

28% of bankruptcy filers reported their race as Black

12% of bankruptcy filers are over age 65

The research showed that people that file bankruptcy have more education than the average population, but are less likely to have a degree. It also shows that Black households are significantly over-represented in the consumer bankruptcy system relative to their share of the population (13% of the US population identifies as Black or African American). 

One of the most startling pieces of data is the rise in older Americans filing bankruptcy. In 1991 only 2% of people over 65 filed bankruptcy, compared to now 12%. This is alarming for a couple reasons, with the main reason being this population typically cannot face garnishment or levy for unpaid debts. This population is also living longer with increased medical expenses, and pensions that have gotten weaker. 

There is so much more to unpack from this data, but a big take away is just how common it is to file bankruptcy. Bankruptcy is not spoken about, and it’s still stigmatized, but you aren’t alone in using the bankruptcy system to start fresh. 

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