Reasons for Bankruptcy are Varied

[Jul 25, 2007.]

 

A new study indicates there are a myriad of reasons behind consumer bankruptcies. The report shows that the vast majority of respondents, 63%, said they were overextended on credit. Such a figure may not be all that surprising, considering the widespread availability of credit cards in today's marketplace.

Failing to plan for the future may be another reason for financial troubles—57% of respondents cited unexpected expenses as the reason for their bankruptcies. Reduction of income was a culprit for 52% of those taking part in the survey. Unemployment was cited by 36%, while illness or injury was cited by 33%. 15% said divorce was a factor in their bankruptcies, while 9% said the birth or adoption of a child played a role.

The death of a family member was cited by 8% of participants, while 5% cited retirement as a factor. Identity theft was mentioned by 2% of those surveyed.

Interestingly enough, the Institute for Financial Literacy also found that women overall face more financial hurdles than men. 54% of the women studied were in credit counseling. The age cohort of women most likely to be in credit counseling and filing bankruptcy were women age 35 to 44, followed by women age 45 to 54, women age 25-34, with women age 18 to 24 making up a small fraction of the total number of women seeking bankruptcy relief.

According to the study, the women in the 35 to 44 year-old age bracket were seeking bankruptcy at twice the rates of their representation in the American population.

What these figures clearly indicate is that there appears to be a great need for financial education for middle-aged women. These women may, in fact, be part of the sandwich generation, forced to care for both children and parents—a situation which can produce a significant financial strain. Many may also be trying to pay for the educations of high school and college age children, leading to additional financial hardship.

Julie Ann Amos
July 25th 2007
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