Filing for bankruptcy is a difficult decision. Many people worry that they’ll suffer from social stigma after they file—after all, there is a pervasive myth in our society that people who go bankrupt are lacking in some way, that they are reckless, dishonest, low class, or poorly educated.
The truth about bankruptcy is very different. Bankruptcy is a tool designed to help people from all walks of life recover from financial difficulties. It is not a sign of moral, intellectual, or social failure. Bankruptcy is a matter of public record, and it will affect your credit (although you will be able to rebuild your credit over time), but most people in your life will never know about your bankruptcy unless you choose to tell them. You may be surprised at the statistics about the kind of person who files for bankruptcy in America today.
“People who file for bankruptcy are a cross-section of society…”
Researchers Teresa A. Sullivan, Elizabeth Warren, and Jay Lawrence studied 2,400 bankruptcy filings from 16 districts and five states, and published their findings in their book, The Fragile Middle Class: Americans in Debt. They found that, “the people who file for bankruptcy are a cross-section of society, and bankruptcy is a middle-class phenomenon.” Here are the details they learned about people who file for bankruptcy:
- Their average age is 38.
- 44 percent are couples filing together.
- 30 percent are women filing alone.
- 26 percent are men filing alone.
- People who file for bankruptcy are better educated than the overall population in America.
- 62 percent of personal bankruptcies are filed because of overwhelming medical debt. 78 percent of these filers had some form of health insurance, but serious illnesses or injuries required unusually high payments beyond what insurance would pay.
- Two thirds of all people who file for personal bankruptcy have lost a job.
- 91 percent have gone through a divorce, suffered a major medical event, or been out of work.
Financial hardships affect well-educated, hard-working, responsible people. If your financial obligations have become overwhelming, bankruptcy might be the best option for you. On the other hand, depending on your particular situation, other options may be available, and may be work better for you. To find out the best solution for your unique situation, discuss your options with a qualified bankruptcy attorney.