You’d think the person who files bankruptcy is some alien fraudster, to listen to my clients.
This is last place I ever expected to be, says the client sitting in my bankruptcy office. I hear that probably twice a week.
Or, the client assures me: I’m not the kind of person who doesn’t pay their debts.
My clients seem to think that only someone who is different or defective has trouble paying their bills. Not so at all.
Who IS the kind of person who files bankruptcy?
It just happens that Leslie Linfield has assembled a composite picture of the “kind of person” who filed bankruptcy last year.
Leslie should know: she heads the Institute for Financial Literacy.
The typical bankruptcy filer
White, married couples in their mid to late 40″s, college educated and both working are the “kind” of people who file bankruptcy.
Doesn’t sound very different or distinctive, does it?
Most of them find themselves in bankruptcy by reason of a loss of income. Even if both are once again working, their income is now less and it’s not enough to pay the accumulated debts.
Trends
Over the past decade, the average age of those filing bankruptcy has risen as more seniors file bankruptcy. Many have carried consumer debt and substantial mortgage payments into retirement and find they can’t make it.
In my Bay Area practice, over the past three years not only am I seeing more people who are 60 plus, I’m seeing more people whose last job paid $150,000 or more.
Now, they are either unemployed, or back to work after an episode of unemployment at far lower pay. Investments in real estate that were expected to provide supplemental income crashed. Expenditures that were manageable and appropriate at higher incomes couldn’t be sustained with a drop in pay.
I am also seeing lots of small business owners, some with businesses that have survived for years, only to go down in the Great Recession.
The face of bankruptcy
In the past week, my new bankruptcy clients have included:
- a 50’s entrepreneur with a well established business floundering under credit card debt that financed operations
- a young couple walking away from a house that is grossly under water
- a retired couple whose start up didn’t
- a 50 ish couple, housing their adult children and their kids, on half the prior income
- two couples who invested in out of state rentals before the crash
More about the decision to file bankruptcy
What factors should you look at when considering bankruptcy?
You don’t need bankruptcy if….
Debt settlement as an alternative
Image courtey of giuliamara
Yesterday I met with a middle aged married immigrant couple from Central America. They came here for a better life and to give their children the opportunity they never had. They succeeded. They are seeing their middle son off to college this weekend where he will be attending Brown University. Their oldest son had graduated from St. Johns.
Not too bad, but putting their first through college put them into serious credit card debt. Now, they are doing something to remedy that situation.
Just wanted to share that story to give another “face.”
Kinda refutes the congressional attitude about the character and values of those who need bankruptcy.
Says something as well about the cost of higher education.