A Fighting Chance

found good jobs, gotten married, and bought homes: In our 1991 study, we found that bankruptcy filers were generally better educated than the average adult population in key respects. Primary bankruptcy filers were slightly more likely than the average person to have had formal education beyond high school and to have completed one to three years of college. Given that education is one of the cornerstones of middle-class identity, this evidence suggests that bankruptcy filers were not on the socioeconomic fringe of society. Similarly, the average primary bankruptcy filer was currently or previously employed in a job rated as prestigious as the average job in society. Finally, we found that debtors’ median age was roughly similar to the population generally. These indicators, as well as the racial/ethnic and gender indicators we looked at, suggest that far from residing on the economic margins of society, bankruptcy filers were generally part of the middle class. See The Fragile Middle Class, 27–74. Also see Elizabeth Warren, “Financial Collapse and Class Status: Who Goes Bankrupt?” (Lewtas Lecture), Osgoode Hall Law Journal 41 (2003): 115, examining data on education, homeownership, and job status for debtors filing for bankruptcy in 1981, 1991, and 2001.

or a family breakup (typically divorce, sometimes the death of a husband or wife): The 2001 Bankruptcy Project revealed that nearly nine in ten families cite three primary reasons for their bankruptcies: job loss, medical problems, and family breakup, which was consistent with previous empirical studies. See The Two-Income Trap, 81 & n.31. In the 1991 study, more than two-thirds of debtors cited job-related financial stress, including job loss and job interruption, as reason for their bankruptcies. See The Fragile Middle Class, Chapter 3. Almost 20 percent of debtors cited medical reasons for their bankruptcies. See The Fragile Middle Class, Chapter 5. And more than 15 percent of debtors cited marital disruption as an important contributor to their bankruptcies. See The Fragile Middle Class, Chapter 6. The 1981 study also concluded that “job loss, divorce, illness and injury [were] implicated in many bankruptcies.” As We Forgive Our Debtors, preface.

full year’s income in credit card debt alone: According to the 1991 study, the mean credit card debt of bankrupt debtors was $11,529, as compared to $3,635 in 1981 (both figures stated in 1997 dollars). To put it even more starkly, in 1991 the average bankrupt debtor had credit card debt that amounted to about six months’ worth of income, as compared to six weeks’ worth of income for the average bankrupt debtor in 1981. See The Fragile Middle Class, Chapter 4. When it comes to homeownership, the 1991 study revealed that about half of the individuals who declared bankruptcy were homeowners, with the total climbing to above two-thirds in some districts. Although the number of homeowners in the bankruptcy sample was underrepresentative of the general population, these findings are quite significant given the relationship among homeownership, assets, and financial security. See The Fragile Middle Class, Chapter 7.

the number of bankruptcies unexpectedly doubled: In 1980 there were approximately 290,000 consumer bankruptcy filings in the United States. By 1987, there were more than 500,000 filings, and by 1990 there were more than 700,000 filings. To see the number of consumer bankruptcies between 1980 and 2010, see “Influence of Total Consumer Debt on Bankruptcy Filings, Trends by Year 1980–2010,” http://www.abiworld.org/statcharts/Consumer%20Debt-Bankruptcy2011FINAL.pdf.