The sheer number of variables that go into creating “financial trouble” are daunting. Marital status, race, region, and health are just a few of some of the more major variables. In many cases, people file for bankruptcy protection or carry large amounts of debt because of several problems. High debt remains one of the most important causes of financial trouble. In 2011, the total consumer debt -- that is, non-government debt -- in the United States was about $4.2 trillion and rapidly growing.
Most people who declare bankruptcy are white and paying a mortgage. Usually, the average income of such people is more than $30,000 yearly, but their debt hovers around $45,000. Among those filing for bankruptcy, about two-thirds have recently lost a job or an important source of income. The average age for a bankruptcy filer is 38, and couples make up about 44 percent of all filers.
People suffering financially usually have a very similar list of problems. Health issues are always prevalent, as are divorce and other sudden and radical change in living situation. Substance abuse is a quick way to go broke; so is losing a job or failing in business. Simple overspending and financial mismanagement make up a large percentage of factors in bankruptcy filings, though these often are coupled with other problems. About 40 percent of those filing bankruptcy say that some combination of health problems, unemployment or underemployment, and divorce are the main causes.
Age and Region
Nevada is the state with the highest percent of its adults filing for bankruptcy, 11 percent. The bankruptcy rates for Georgia, Nevada and Tennessee hover around 8 percent of their adult populations. Almost 20 percent of those declaring bankruptcy are college students, and the fastest-growing area of bankruptcy filings is in people younger than 25.
One of the most consistent predictors of poverty has been family status. About 68 percent of children born to single-parent families are poor. For intact families, that falls to 10 percent. This means that divorce and illegitimacy are an important indicator of future financial trouble.
Bankruptcy and Debt
Almost 50 percent of those filing for bankruptcy reported some form of health trouble that forced them into financial difficulty. The average household -- just on credit cards -- owes about $6,500. Almost 5 percent of all issued credit cards are more than 60 days late on payments. About 63 percent of those declaring bankruptcy claimed that credit card payments were an important reason for filing.
- The New Bankruptcy Law: Bankruptcy Stats
- Business Insider: 9 Alarming U.S. Consumer Debt Statistics; Economy Watch; May 23, 2011
- StartingOverToronto.com: The Top 10 Reasons for Financial Difficulty; Victor Fong, CMA, CIRP; 2011
- The Witherspoon Institute: The Two-Biological-Parent Family and Economic Prosperity: What’s Gone Wrong; William Jeynes; July 20, 2011
- Atlanta Bankruptcy News: Georgia Has Second Highest Bankruptcy Rate in Country; Laura Fishman; Jan. 14, 2011
- University Credit Union: Highly Educated and Deep in Debt; Amy Manzetti; April 21, 2003