Study: Bankruptcy rises among those with college degrees and jobs
The recession has hit most sectors of society extremely hard, and that fact is showing up in the profiles of those filing for bankruptcy, according to a recent study by the nonprofit Institute for Financial Literacy. While the unemployed and those with less education continue to be among the most likely to have serious financial problems, the number of bankruptcy filings among people with college degrees and those with relatively high-paying jobs has risen dramatically. The study also found that being married, which has traditionally been one factor that keeps people financially stable, no longer has the protective effect it once did.
The study analyzed survey responses from 50,000 individuals who filed for bankruptcy in the past five years. Of those bankruptcy filers, 64 percent were married, an increase of more than 60 percent over the average of married filers in 2006.
Earning a bachelor’s degree is typically associated with greater prospects for financial success, but 13.58 percent of the bankruptcy filers had college degrees — a 21 percent increase since before the recession. Filings by people making $60,000 a year or more were up by 67 percent.
At the highest risk for bankruptcy were those who had attended college but had not completed a degree. The combination of student loan debt and unemployment or underemployment was devastating, and people in this group made up 28.7 percent of all bankruptcy filings last year.
The largest percentage of filers were still those earning less than $20,000 per year and people with a high school education or less. This recession has changed the proportions, however, with higher-income earners creeping into the bankruptcy system in greater numbers. Because of increases in college educated filers, the proportion of filers with high school diplomas or less dropped by 8.6 percent.
“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 the Institute for Financial Literacy’s executive director.
“While less educated, low income individuals continue to represent the typical bankruptcy filer, this report underscores sophisticated evolution of the profile of the American debtor that now extends to disparate age, income and ethnic groups.”
Source: The Wall Street Journal’s Bankruptcy Beat, “Marriage, College, Job Won’t Ward Off Bankruptcy,” Eric Morath, Sept. 13, 2011