There is a terrible misconception that bankruptcies are a result of careless spending or financial irresponsibility. However, having dealt with numerous bankruptcy cases throughout my career, the overwhelming majority tend to stem from people falling into unfortunate circumstances e.g. losing a job, incurring high medical bills as a result of injury or chronic illness, etc. Here are 6 revealing stats about bankruptcy in America.
1. Bankruptcy is on the Decline
The number of bankruptcy cases has been on a steady decline since 2005. Interestingly, the fall has been sharper in the case of business compared to individuals. In 1980, nearly 13 percent of all bankruptcy fillers were businesses. Today, the figure is less than 3 percent. However, as the country enters a recession, the number of bankruptcy cases are likely to surge upwards again.
2. California Leads in Terms of Total Bankruptcy Cases
On average, California tends to have the highest number of total bankruptcy cases. In 2011, at 240,151, the state accounted for 17 percent of all bankruptcies across the country and nearly the same as the number for the next three states combined.
3. Two-Thirds of All Bankruptcies Relate to a Medical Condition
Without argue the biggest reason why Americans file for bankruptcy is due to incurring high medical expenses or due to time out of work. A recent study found that a staggering 66.5% of all bankruptcies were tied to healthcare costs. As healthcare costs have increased over the years while real income had remained largely stagnant, the proportion of bankruptcy cases citing this reason is also increasing.
4. Bankruptcy in Older People is Increasing
Since the 90s, the number of seniors filing for bankruptcy has been on the rise. The percentage of bankruptcy filers aged 55 or above has more than doubled in this period, now accounting for 20% of all cases. Interestingly, at the same time, bankruptcy among younger individuals (<25) has seen a sharp decline. In 1994, they accounted for 11% of all cases. In 2010, the figure was only 1.33%.
5. Women Are More Likely to File for Bankruptcy
In 2010, women accounted for 52.26% of all bankruptcy filings. However, the proportion has gradually decreased over the years, largely because of more economic opportunities opening up for women and the gender pay gap diminishing.
6. Bankruptcy Filling Among Lower-Income Decreasing
For those earning $30,000 or under, the percentage of total filers decreased from 67.7% in 2006 to 59.53% in 2010. However, for those earning $60,000 or above, the percentage increased from 5.5% to 9.18% in the same period. Thinking of filing for bankruptcy? The help of a legal lawyer can be crucial for better navigating through the complex process. For a free consultation with an experienced lawyer, book an appointment with us online or call 512-640-3440.