As part of the 2005 revisions in bankruptcy law, bankruptcy courts are required to collect statistics. The 2007 numbers are now in, and, as a bankruptcy attorney in Indiana, I found them very interesting and important, yet very much in line with my own twenty-plus year bankruptcy experience.
First, the numbers: There were 822,590 cases of bankruptcy in the U.S. in 2007, of which 61% were Chapter 7, with almost all the rest being Chapter 13 repayment plans. The median average monthly income for all the people who filed bankruptcy was $2490 (It was actually $2150 for those filing Chapter 7 and $3146 for those filing Chapter 13 bankruptcy.)
As I explained in my earlier blog, Some Hopeful News For This Bloomington Bankruptcy Attorney, Chapter 13 bankruptcy filers must have an income that is enough for them to make regular payments to their creditors. According to the bankruptcy statistics compiled by the courts for 2007, median monthly expenses came to $2482, so the Chapter 7 filers would not have had enough left over to make catch-up payments on debt, while the Chapter 13 filers had approximately $600 a month on average to devote to paying down the debt.
Meanwhile, another group, the Institute For Financial Literacy, was compiling their own 2007 statistics. This nonprofit organization gathered information on more than 36,000 consumers who had sought credit counseling prior to filing bankruptcy. The study reported that the average American seeking credit counseling is Caucasian, married, employed, age 33-44, with at least a high school education, with women more likely to file than men. Almost all of them were earning (or had been earning before a job loss) less than $30,000 a year.
The primary problems leading to bankruptcy, according to the Institute, were overextended credit, job loss, and illness or injury. These are precisely the causes I’ve been writing about in my bankruptcy blogs.
Bankruptcy statistics are hardly the happiest of numbers, but my reason for sharing them goes back to the message I share with Oprah WInfrey (See Bankruptcy Blog Shares Message With The Oprah Show): You’re Not Alone!