September 16, 2011

More College Graduates are Filing For Bankruptcy

Posted in Bankruptcy tagged at 11:22 am by demetriagraves

People who file for bankruptcy can come from all walks of life. I’m often asked, what type of person files for bankruptcy? What is their profile? A wedding ring, college degree and a well-paying job sound like the American dream but they may be recipe for bankruptcy? Some of the factors often associated with financial success, like being a college graduate are increasingly becoming correlated with filing for personal bankruptcy, according to a study released recently by the Institute for Financial Literacy.
The study found that from 2006 to 2010, bankruptcy filings increased among college graduates and those earning $60,000 a year or more. What’s more, last year, 64% of bankruptcy filers surveyed were married—a number that also increased from five years ago.
It seems that the Recession has had a dramatic impact on the bankruptcy filings of American consumers across the economic spectrum—including college educated and high income earners. While less educated, low income individuals continue to represent the typical bankruptcy filer, this report highlights an evolution of the profile of the American debtor that now extends across all age, income and ethnic groups.
The survey collected responses from some 50,000 of individuals that filed for bankruptcy in the past five years. All respondents had sought credit counseling. The study found that those holding a bachelor’s degree accounted for 13.58% of filings last year, up from 11.2% in 2006—a 21% increase. Those holding high school degrees still accounted for the largest percentage of filers, 36.27%, but their proportion of all filers fell by 8.6%. Those most at risk for a bankruptcy filing were individuals who attended college but did not complete a degree. This group accounted for 28.7% of filings last year. This may be because they have all the burdens of school related debt and none of the rewards of an actual degree.
While those earning less than $20,000 per year accounted for nearly 40% of all filings, higher-income earners saw their ranks grow in the past five years, the study found. Those earning $60,000 or more accounted for 9.2% of all filings last years, up from 5.5% in 2006, a 67% increase. The study found that the number of filers who were married jumped above 60% in the past five years, from 57.2% in 2006. That out paces the 50.3% of U.S. adults that are married, according to the Census.
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