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Consumer Bankruptcy Filings among College Educated, High Income Earners on the Increase

September 21, 2011 Comments off

Consumer Bankruptcy Filings among College Educated, High Income Earners on the Increase
Source: Institute for Financial Literacy

Neither a college education or high paying job is enough to protect consumers against filing for personal bankruptcy according to the 2010 Annual Consumer Bankruptcy Demographics Report 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 as the rate of degree holders filing bankruptcy increased by 20%;
  • Bankruptcy filers earning incomes above $60,000 increased their rate of filing by over 66%;
  • Asian American filings have doubled while Hispanic/Latino filings increased by over 33%;
  • Americans age 34 and younger decreased the rate of filing bankruptcy by over 30% since 2006;
  • The Gender Gap in bankruptcy filings is closing;
  • Americans who are married are more likely to file and represent over 60% of all filings; and
  • The primary reasons for financial distress include overextension on credit; unexpected expenses, illness/injury and divorce.

+ Full Report (PDF)

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