Higher Educated People Filing For Bankruptcy

By Cornelius Nunev

We've all learned that it pays to get a college degree. But perhaps it does not pay as well as it once did. A new study indicates that the number of college knowledgeable people filing for bankruptcy has increased by twenty percent over the last 5 years. The age and salary of filers has also increased.

College-educated, higher-income earners

There was an increase from 2006 to 2010 from 11.2 percent to 13.6 percent of those with graduate degrees declaring bankruptcy according to the Institute for Financial Literacy report released Tuesday.

About 70 percent of filers are individuals that do not have a college diploma. There was a greater rate of individuals filing that had any degree though. This is compared to years before. Those with just a high school education have a higher chance of filing. These individuals make up for about a third of all filings done.

Leslie Linfield is the Institute for Financial Literacy founder. She said:

"There's these mythologies out there that if you go to college and you get a degree, you're going to do financially better. I think this data is starting to erode at this myth. ... The Great Recession has had a dramatic impact on the bankruptcy filings of American consumers across the economic spectrum -- including college-educated, high-income earners."

Enormous survey

There were more than 50,000 debtors in courses for bankruptcy credit counseling or money management from 2006 to 2010. After the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act, this study was done to follow bankruptcy statistics. President George W. Bush signed the BAPCPA. This was done so those who were declaring bankruptcy could be controlled just a little bit better.

Looking at ethnicity

"While less educated, low-income individuals continue to represent the typical bankruptcy filer," Linfield said, "this report underscores a sophisticated evolution of the profile of the American debtor that now extends to disparate age, income and ethnic groups."

Most filings had 35 and 44 in 2006. By 2010 that demographic had shifted to individuals between the ages of 45 and 54. Linfield finds them particularly at risk. "At 54," she asked, "do they really have enough time in front of them to start over?"

About 66 percent of filers made less than $60,000 a year.

There was a large increase for Asian Americans. It increased to 4.5 percent from 2.1 percent. There was also an increase from 6.5 percent to 8.7 percent in Hispanic filers. There was a decrease from 2006 to 2010 in the amount of African-Americans that filed as it went from 15.4 percent to 11.3 percent.

Why is it taking place?

There has been a ton of career loss, which has brought on much of the problems to take place, as reported by Linfield. Customers responding to the study cited over-extended credit, career loss and reduction of income more than any of other reasons as the causes of their financial turmoil.

The New York Daily News explained that the number of bankruptcies in The United States went up 1.5 million.

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