It’s easy for those who don’t understand bankruptcy to assume based on Hollywood dramatization that those most likely to file are the rich who have made serious financial blunders. In fact, this is not the case at all. Most who file for bankruptcy actually have a low income and file not because of a financial blunder, but unexpected financial hardship. These myths and others you have probably heard may be busted by the following statistics.
Bankruptcy Cases Reached an All-Time High in 2005
In 1980, the number of people who filed for bankruptcy began increasing consistently until 2005, when it hit an all time high. More than 2 million cases were filed in 2005. It was estimated that in that year, 1 in every 55 households would file for bankruptcy.
Bankruptcy Filing Rate Has Declined since 2013
Thankfully, that all-time high didn’t last for long, as the amount of filers steadily decreased again until 2013 with just a little over half a million bankruptcy filings, a much better financial outlook following the worst of the recession.
States with High Numbers of Bankruptcies
Some states have much higher numbers of bankruptcies than others. The highest recorded number of cases can be found in California, with Florida, Georgia, Illinois, and Ohio following respectively. The number of filers combined among these five states accounts for nearly half of the bankruptcy cases in the United States.
Recession is the Largest Cause of Bankruptcy
During the 2005 all-time high of bankruptcy cases, medical conditions were the leading cause of bankruptcy. Since that time, studies show that results of a poor economy, such as reduced income, job loss, debt, and divorce are the leading causes of bankruptcy.
Bankruptcy Knows No Gender
Studies show that despite the still unequal pay scales for men and women, bankruptcy is nearly equal for each gender and the gap is shrinking all the time.
Bankruptcy May Coincide with Education
The smallest amount of those who filed for bankruptcy held a bachelor’s degree or higher. An estimated two thirds of bankruptcy cases are filed by those with just a high school degree or some college.
Most Who File Have Low Income
As mentioned previously, it is not common for the rich to blunder so badly that they must file for bankruptcy. Roughly two thirds of filers have salaries less than $30,000 per year.
These startling statistics show that you can’t always assume things about bankruptcy. If you find that you’re nearing the point of financial hardship, there is no shame in that. The best thing you can do is act now so that your bankruptcy case yields the best possible results.