The profile for the average person filing for bankruptcy may not be what you think. A recent study by the Institute of Financial Literacy found an increasing number of people filing bankruptcy are college graduates and high income earners. Whether in Nashville, Clarksville or Murfreesboro, more and more college educated people are turning to a Tennessee debt solutions attorney for help with their debt problems.
The Institute began looking at the demographics of bankruptcy filings after the new bankruptcy laws came into effect in 2005. From 2006 to 2010, they observed a 20 percent increase in the number bankruptcies by college graduates. Although those with a high school education still made up the largest percentage of filings - 36.27 percent of all filings in 2010 - their percentage of filers decreased 8.6 percent during the study's five-year period.
In addition, the Institute's findings, which were published in the 2010 Annual Consumer Bankruptcy Demographics Report, indicated that:
- the bankruptcy filings for those with bachelor's degrees increased by 21 percent from 2006 to 2010
- those who went to college, but did not complete their degree programs, accounted for 28.7 percent of bankruptcy filings in 2010
- the amount of bankruptcies filed by those who earned over $60,000 per year jumped by 67 percent during the timeframe of the study
- those earning less than $20,000 per year accounted for 40 percent of the bankruptcy filings during those years
"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," Leslie E. Linfield, Executive Director and Founder of the Institute for Financial Literacy, said in a statement. "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."
Reasons for the Increase in Bankruptcy Filings
According to the study, the most common reasons that people gave for filing for bankruptcy were the loss of a job, a reduction in income, and unexpected medical expenses caused by an illness or injury. Credit card debt and medical debt are some of the biggest reasons people turn to bankruptcy.
And according to Linfield, things may get worse before they get better. She said that she expects to see a lot more bankruptcies among high earning Americans with college educations. Until the economy improves, the trend is likely to continue.
If you are fighting mounting debt, you should speak to an experienced Nashville and Middle Tennessee bankruptcy attorney. It is important you understand all of your options, including the advantages and disadvantages of each type of bankruptcy. Once you have the knowledge, you can feel empowered to make the best choice for you and your family.
