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Who’s Filing Bankruptcy in Orange County?

It’s almost a guarantee that a potential client will say at some point during an initial meeting with a bankruptcy attorney that, “I can’t believe I have to do this; I’m not the type of person that files bankruptcy.” This will normally lead to the bankruptcy lawyer explaining that whatever stereotype that individual or couple has adopted about “the type of person that files bankruptcy” is probably unfounded and inaccurate.

As a recent article in the American Bankruptcy Institute Journal titled “The Composite Consumer Debtor” by Leslie E. Linfield from the Institute for Financial Literacy points out, the “typical bankruptcy filer” has changed drastically since the bankruptcy code revisions in 2005 (BAPCPA).  Ms. Lindfield’s article summarizes the surprising findings of a 5 year research project conducted by the Institute for Financial Literacy regarding demographics of bankruptcy filers between 2005 and 2010.

Some of the more interesting statistics regarding the typical bankruptcy filer as noted in “The Composite Consumer Debtor” are:

  • There was a 20% increase in filings by debtors with college degrees between 2005-2010
  • Approximately 72% of bankruptcy filings from 2005-2010 were filed by Caucasians
  • From 2005-2010, there was a 66% increase in bankruptcy filers making $60,000/yr. or more
  • During the same time period, nearly 62% of bankruptcy filers were married; and
  • Between 2005-2010, bankruptcy filers ages 45 and up have increased by 19% while those 34 and younger have decreased by over 30%

If these statistics interest you, you can read Ms. Lindfield’s entire article by following this link. Or, if you are really interested in these demographic changes in consumer bankruptcy debtors and want to see the entire report by the Institute for Financial Literacy titled “A Five Year Perspective of the American Debtor,” click the title or here.

As Cathy Moran (a highly distinguished and veteran bankruptcy attorney) recently wrote in her article “The Face of Those Who File Bankruptcy”; according to the above-referenced study, “white, married couples in their mid to late 40’s, college educated and both working are the ‘kind’ of people who file bankruptcy.”

While it is impossible to put every bankruptcy filer in a mold that fits all, it seems that the mold fitting many is changing and moving away from traditional ideas about bankruptcy filers. Hopefully the next time someone files bankruptcy (a friend, family member, or other), the immediate reaction won’t be to stigmatize that person because they filed. Rather, the reaction can be to accept that good and honest people are faced daily with this extremely difficult decision and that the decision to file bankruptcy is virtually always a last resort.

About the Author
Christian Spaulding is the founder and principal attorney at Spaulding Law Group. Mr. Spaulding has lived in Southern California his entire life and his family has been in Southern California since the late 1800’s. Mr. Spaulding received his undergraduate degree from Chapman University in Orange with a Bachelor of Science in Accounting. While completing his undergraduate studies, Mr. Spaulding was the recipient of the prestigious Wall Street Journal Student Business Award. Mr. Spaulding graduated at the top of his accounting program at Chapman University and attended law school at Chapman University School of Law where he was a Merit Scholarship recipient. Mr. Spaulding has focused his firm’s practice solely on consumer protection and bankruptcy since 2009.

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