Bankruptcy Trends To Know

In 2019 alone, 36,794 Ohioans filed for bankruptcy. Though many have concerns about how bankruptcy will impact life in Columbus, Ohio, knowing trends in bankruptcy filings, the seasonal causes, and the outcomes of a bankruptcy filing can actually alleviate many of those concerns.

Why are people filing for bankruptcy? – Bankruptcy Trends

Across the United States, there has been a peak and subtle decline in bankruptcy filings since 2005. This is due to recessions, loss of jobs, and world events which impacted earning prospects for thousands of Americans.

However, The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) has led to changes in bankruptcy trends. The Act led to reform in how bankruptcy filings were conducted, in essence making it more difficult for an individual to successfully petition for bankruptcy as the means test was now required to prove eligibility.

Under the Act:

  • Chapter 7 bankruptcy eligibility guidelines were more restrictive
  • Chapter 13 filings were encouraged more
  • Some retirement assets such as IRAs were given federal bankruptcy protection

Regardless of these changes in bankruptcy code, people are filing for bankruptcy for many of the same reasons. Causes of bankruptcy include:

  • Income loss
  • Medical expenses
  • Mortgage costs
  • Student loans
  • Divorce
  • Changes in family size (such as the birth of a child or death of a spouse)

While these factors are important to know, it also helps to know who is filing for bankruptcy.

Bankruptcy Filings by Demographic

From 2006 to 2010, those between the ages of 34 to 54 declared bankruptcy the most across the United States. In that same timespan, women were more likely than men to file for bankruptcy.

This can be due to a variety of factors including the gender pay gap and population difference between men and women.

In addition to age and gender playing a large role in bankruptcy statistics, marital status and education also are contributing factors.

The Institute for Financial Literacy explains that married couples are more likely than divorcees and those who are single to file for bankruptcy. This is believed to be due to the financial obligations of family units.

The same report explains that your education level will also change your likelihood of filing for bankruptcy.

The following explains the breakdown of bankruptcy filings by education achieved:

  • High school/GED: 31.05%
  • Some college: 19.35%
  • Bachelor’s degree: 18.01%
  • Primary school: 13.34%
  • Graduate degree: 9.27%
  • Associate’s degree 8.61%
  • No education: 0.37%

Because income is an intersectional issue, it’s important to note that race and income are also contributors to bankruptcy potential.

The most prominent group to file for bankruptcy are those who are Caucasian/White, making up more than 70% of bankruptcies in the United States. In addition, those who make less than $30,000 per year are more likely to file bankruptcy. For example, for a family size of three people, the federal poverty rate is $21,720 yearly income. Though these individuals are more likely to file for Chapter 13 bankruptcy to avoid upfront attorney fees, the trend of filing for Chapter 7 continues to be prominent, even with Bankruptcy Code changes.

While no two bankruptcy filings are the same, knowing you are not alone in your financial struggles can often ease the worry of the stigmas of bankruptcy. If you are ready to achieve a financial fresh start, The Jones Law Firm is here for you.

Columbus, Ohio Bankruptcy: The Jones Law Firm

Attorney Michael Ryan Jones is committed to assisting individuals of Columbus, Ohio in their bankruptcy journey.

If you live in the central and Columbus, Ohio region, The Jones Law Firm is here to help you through the process. Contact us today for a free consultation.