Higher Education, Income No Guarantee Against Bankruptcy

Consumer bankruptcy filings among college educated, high-income earners is on the rise.

September 30, 2011

Neither a college education nor high-paying job is enough to protect consumers against filing for personal bankruptcy according to the 2010 Annual Consumer Bankruptcy Demographics Report by the Institute for Financial Literacy, a national nonprofit financial education and counseling organization based.

“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 Leslie E. Linfield, executive director and founder of the Institute for Financial Literacy. “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.”

Key findings include:

  • College education doesn't appear to ward off bankruptcy as the rate of degree holders filing bankruptcy increased by 20%;
  • Bankruptcy filers earning incomes above $60,000 increased their rate of filing by more than 66%;
  • Asian American filings have doubled while Hispanic/Latino filings increased by more than one-third;
  • Americans age 34 and younger decreased the rate of filing bankruptcy by more than 30% since 2006;
  • Americans who are married represent more than 60% of all filings; and
  • The primary reasons for financial distress include overextension on credit, unexpected expenses, illness/injury, and divorce.

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Check back for weekly Research Roundups.

LORA KLOTH is a research librarian in CUNA’s business-to-business publishing department.