Who's Filing for Bankruptcy?

Where'd The Numbers Come From?

The demographic bankruptcy statistics come from the most recent study by the Institute for Financial Literacy. Their statistics have been combined with US Census data and the overall number of personal bankruptcy filings in 2008 to calculate a "per demographic" percentage of people filing for bankruptcy.

Admittedly, the figures are estimates, however, the numbers are telling of some interesting trends.

What Do They Mean?

While the data is estimated, it reflects how one particular demographic group is more or less likely to file for bankruptcy compared to another.

How to Not File for Bankruptcy

Want to ensure your financial security? You can use the data here to better your odds of not filing for bankruptcy. Follow these six simple guidelines and you should be fine.

1. Don't Get Old.

According to the numbers, Americans who between 18 and 24 are the least likely of any age group to file for bankruptcy. Probably because they haven't lived long enough to rack up debt and get themselves into trouble yet.

1.5. Get Older

The first runner up in the age demographics is the 65 and older crew. These are the ones who still remember paying for their car before they got the keys, instead of the other way around.

2. Finish School or Don't Even Start.

Surprisingly, the two opposite ends of the educational spectrum are the least likely to end up filing for bankruptcy. Americans with a Four Year College Degree are about as likely to file for bankruptcy as those with no education. Both groups are less likely to file than those with a high school diploma or some college. So if you're gonna do it, go all the way otherwise don't bother.

3. Make More Money.

Yeah, the more you make, the better.
Big Surprise.

4. Be Hispanic.

According to the stats, Hispanics are the least likely of all ethnic groups represented to file bankruptcy. Maybe it's a cultural thing, but either way if you're Hispanic you're good.

5. Don't Get Fired. Or Laid Off.

This one takes the cake for most obvious results. Americans who are unemployed are more likely to file bankruptcy than any other demographic group on this page.

Job loss is probably the number one driver of financial distress, and it's no wonder that recently bankruptcy filings have been increasing as the unemployment rate skyrockets.

6. If You're Single, Don't Get Married.

Apparently, being married makes you more likely to end up filing for bankruptcy than being single. So, maybe marriage is not such as wise financial decision? You do get some tax benefits though.

6¾. If You're Married, Don't Get Divorced.

If you are married, stay that way. Getting divorced is one of the major drivers financial duress, and potentially bankruptcy.

The Demographics of Filing Bankruptcy

Recent economic pressures have been forcing more and more Americans into bankruptcy as a means of recovering from upside-down mortgages and stock market investments gone down the drain. The Institute for Financial Literacy has been taking demographic studies of bankruptcy petitioners since 2006.

We've taken the most recent figures (2008), combined with US Census data to highlight the percentage of bankruptcy filings by various metrics normalized for differences in population. The result shows how different demographic groups are more or less likely to end up filing bankruptcy.

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Age Group

Age demographics of bankruptcy filers shows a bell curve with it's peak, and highest rate of filing, at about 40 years old.

Educational Level

Clearly, there is a correlation between those people who begin college but do not finish, and a higher than normal rate of bankruptcy. This data suggests that those people who do not finish college may have an aptitude for poor financial decision making and/or work ethic.

Income Level

Not surprisingly, those Americans with higher earning capacity are less likely to file for bankruptcy than those earning less.

There is a sharp drop of at the 60k and up bracket due to it's encompassing groups with six figure salaries.

Race/Ethnicity

There was pretty much a tie for highest rate of bankruptcy by ethnicity, with Caucasians and African Americans filing at the highest. On the other end of the spectrum are Hispanics and Native Americans, who file at almost have the rate of Caucasians and African Americans.

Not included in this chart are the group that labeled themselves as "other". This group is not clearly defined and the rate of bankruptcy was a far outlier and unreliable.

Employment Status at Time of Filing

There is no clearer indicator of demographic differences and rate of bankruptcy than employment status. Obviously, unemployment and underemployment and other losses of income are the single largest driver of financial distress and bankruptcy filings.

Additionally, it goes to show why chapter 7 bankruptcy is the most common, as unemployed debtors do not have the means to adhere to a chapter 13 repayment plan.

Marital Status at Filing

After unemployment, divorce is another event driving debtors to file for bankruptcy. The cost of divorce, combined with the division of assets creates serious financial strains.