Who was more likely to file for bankruptcy in 2019, a single or married person? What about people with college degrees? What about residents of southern states?
Research published in The Ascent, from The Motley Fool, answers those questions and more. The report, Personal Bankruptcy Statistics 2019, examines interesting trends, including the fact that bankruptcies have been on the decline over the past 10 years.
A recent history of bankruptcy
Personal bankruptcy filings had been steadily increasing from 1980 through 2005, a peak year for filings. But they have been steadily decreasing since 2010. What changed? One significant factor is the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005, which added new provisions to the process.
After the BAPCPA went into effect, consumers were only allowed to file for Chapter 7 bankruptcy if they made less than the median income in their state. If they made more than the median income, they could take a “means test” to show they would be unable to afford a payment plan to pay off debts.
Consumers who earned more than the median and who could not pass the means test could only file for Chapter 13.
Here are definitions of the two most common types of bankruptcies:
- Chapter 13 bankruptcy means a debtor is committing to a 3- to 5-year payment plan. After the plan is completed, debts can be discharged.
- Chapter 7 bankruptcy allows the debtor to liquidate all nonexempt property and discharge his or her debts within three to six months.
Bankruptcy statistics for South Carolina
In South Carolina, there were 6,547 bankruptcy filings in 2018. With a population of just over 5 million residents, South Carolina saw 1.29 filings per 1,000 residents. By comparison, Alabama had the most filings for its population – 5.42 filings per 1,000 residents.
The Motley Fool cites seasonal work and fluctuating wages as the main reason why southern states see more bankruptcy cases than the rest of the country. Residents in southern states also tend to make less income than citizens of other regions. Overextension on credit, drop in income or unexpected expenses are top reasons for filing
Other interesting statistics about bankruptcy:
- Bankruptcy filing is highest among people who are 35-54 years old.
- Women file more often than men.
- Married people tend to file more than those who are single, divorced, widowed or cohabitating.
- People with a college education are less likely to file than those without degrees.
How a bankruptcy attorney can help
While bankruptcy filings have been on the decline, sometimes “life happens” and you need to consider your options to eliminate debt. You may have lost a job. You may be dealing with an unexpected financial crisis. Whatever your circumstances might be, you should not give up hope. And you shouldn't feel that you have to navigate the process on your own.
Matthews & Associates, LLC helps people across South Carolina get the help they need to take control of their circumstances. If you’re thinking of filing for bankruptcy and or have questions, contact experienced bankruptcy attorney Ben Matthews today for a free consultation.