Who Files Bankruptcy?

Who Files Bankruptcy?
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People who are thinking of filing bankruptcy often feel alone or stranded. They may have never known anyone who has filed, and they may feel like they have no one to talk with about it. It can certainly be intimidating when you think you’re the only one who has ever been in severe enough financial stress to consider seeking a discharge of those debts.

Bankruptcy affects all walks of life and all income levels. It affects married and single people, and age is no barrier. Seniors, as well as those just starting out in life, file bankruptcy.

Cases Filed in 2020

Statistics can often give us a picture of averages, but the actual spread is large. Let’s start with some basic figures for the numbers of cases filed, in this case for the year 2020.

Total Filings 544,463
Chapter 7 381,217
Chapter 11 8,113
Chapter 13 154,341
Total Other Chapters 792
Cases Filed in 2020
Total Business Filings 21,655
Chapter 7 12,197
Chapter 11 7,561
Chapter 13 1,105
Total Other Chapters 792
Business Filings in 2020
Total Nonbusiness Filings 522,808
Chapter 7 369,020
Chapter 11 552
Chapter 13

153,236

Nonbusiness Filings in 2020

Let's look at those numbers as percentages for each type of bankruptcy as compared with the total number filed in 2020:

Chapter 7 70.02%
Chapter 11 1.49%
Chapter 13 28.35%
Other Chapters 0.14%
Percentage of Each Chapter Filed in 2020

Most Bankruptcies Per Capita

The statistics are reported by each of the federal judicial districts in the 50 states, Washington, D.C., ​and territories. That allows us to compare other interesting facts, like how many people file as compared to the general population. For instance, a Chicago Tribune article listed the 12 states with the most bankruptcy filings per capita:

  1. Alabama
  2. Tennessee
  3. Georgia
  4. Mississippi
  5. Illinois
  6. Nevada
  7. Arkansas
  8. Indiana
  9. Kentucky
  10. Utah
  11. Ohio
  12. Delaware

It is difficult to pinpoint exactly why there is such a wide variation in filing rates across the country. However, it may involve the local legal culture, the presence or absence of effective debt collection laws, or state poverty rate.

You can view more filing statistics at the US Courts website.

What Factors Lead to Personal Bankruptcy Filings?

Because filing a bankruptcy case can be a huge decision with long-lasting consequences—positive and negative—people who are contemplating filing bankruptcy often want to know if their reasons for filing are typical, reasonable, or sound.

An American Journal of Public Health study reported that 66.5% of all bankruptcies were tied to medical issues. This includes medical debt itself in addition to the loss of income/wages from time off work. However, medical debt is far from the only reason people file for bankruptcy.

Other leading factors that contribute to bankruptcy filings include unemployment and domestic issues like divorce. Many of these factors involve circumstances the filer could not control.

Bankruptcy Filing Demographic Statistics

Consider the following statistics about filing bankruptcy from Debt.org:

  • More than 64% of bankruptcy filers are married.
  • Those younger than 25 made up less than 2% of filers. About 20% of filers are 55 years or older. The median age is about 45.
  • People ages 65 and older make up about 8% of filers. Those ages 34 and younger make up about 19% of filers.
  • Women are slightly more likely to file than men: 52% vs. 48%.
  • 60% make $30,000 or less annually. Almost 10% of filers made $60,000 or more.
  • 20% of bankruptcy filers held a bachelor's degree or higher.
  • 29% had some college education.
  • 36% had a high school education level.
  • 16% are repeat bankruptcy filers.

Bankruptcy affects all age groups and all socioeconomic classes. In fact, it's easy to argue that there is no one "average" or typical bankruptcy filer. But if we were to build one, she would likely be a middle-aged married woman, who graduated from high school and makes less than $30,000 per year.

Even so, the statistics bear out that outside circumstances—more so than age, income, or educational level—play a huge role in decisions to file or not file.