A growing number of college graduates are filing for bankruptcy, suggesting that an advanced education is no longer the hedge it once used to be in preventing personal financial turmoil, a new report finds.
The percentage of college graduates filing for personal bankruptcy rose 20 percent during the last five years, according the 2010 Annual Consumer Bankruptcy Demographics Report, published by the Institute for Financial Literacy.
The report also found that financial woes aren't limited to one type of household, with many groups, including those with higher incomes and advanced degrees, reporting higher instances of bankruptcy.
Fallout from the Great Recession has affected people across the economic spectrum and boosted the number of households filing for personal bankruptcy, says Leslie E. Linfield, the organization's founder and executive director.
"While less educated, low income individuals continue to represent the typical bankruptcy filer, this report underscores a sophisticated evolution of the profile of the American debtor that now extends to disparate age, income and ethnic groups," Linfield says in a statement accompanying the report's release.
In the wake of the Great Recession, the group set out to determine whether the profile of households that filed for bankruptcy in 2010 looked the same as those in 2006, a year after the Bankruptcy Abuse Prevention and Consumer Protection Act went into effect.
The report reveals that the Great Recession not only resulted in an increase in the number of personal bankruptcy filings but that a growing swath of Americans have seen their lives upended by financial distress.
IFL noted that these significant findings have resulted since the passage of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act:
- The gender gap in bankruptcy filings is closing.
- More than 70 percent of debtors didn't graduate from college.
- Americans with advanced degrees are filing at higher rates.
- The majority of bankruptcy filers earn $40,000 a year or less.
- Americans who are unemployed saw a jump in filings by 23 percent since 2008.
- Americans who are married are more likely to file and represent more than 60 percent of all filings. Of those, nearly 35 percent were joint petitions.
It also noted these changes in bankruptcy filings during the past five years, which may be attributable to the Great Recession:
- The rate of bankruptcy filings among Americans 45 years and older increased by 19 percent.
- The rate among Americans age 34 and younger decreased by more than 30 percent since 2006.
- Filings among Asian American have doubled while Hispanic/Latino filings rose by more than 33 percent.
- College education doesn't appear to ward off bankruptcy, as the rate of degree holders filing for bankruptcy climbed 20 percent.
- Bankruptcy filings among those earning incomes above $60,000 increased by more than 66 percent.
- Filings among Americans who are unemployed increased by 21 percent since 2006.
- Filings among Americans who are married has increased by 12 percent since 2006.
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