In the United States, bankruptcy statistics are increasing at an alarming rate. In the last two decades, the number of insolvent people has significantly increased.
As public platforms have improved their understanding of these bankruptcy statistics, many steps have been taken hoping that the growing numbers will decline exponentially. However, according to current statistics, more than 1.5 million people file for bankruptcy each year.
What Does It Mean?
So what does it mean to file for bankruptcy? Filing is a legal process that can involve companies or individuals who are unable to pay outstanding debts. Today, we will study some of these statistics to understand why bankruptcies are so common.
Basic Numbers
Some basic statistics about bankruptcy: 5% of bankruptcy cases are attributable to frivolous spending or use of credit. In the first three quarters of 2020, the highest number of bankruptcies occurred to date. In the United States, 20% of bankruptcies are filed by college-educated people. In addition, 52% of bankruptcy filers are men.
While some statistics are from irresponsible spending, many others are due to factors outside the control of an individual, such as medical debt. Did you know that 62% of US bankruptcies are due to medical expenses? A study by Harvard University shows that there is no doubt that the most important of all bankruptcy statistics in the United States is that medical expenses cause almost two-thirds of bankruptcies. One of the most interesting figures in this study is that 72% of bankruptcy filings come from people with some form of health insurance. While this is shocking, it also breaks the myth that medical expenses only affect the uninsured.
Circling back to reckless spending, a minuscule 5% of it accounts for bankruptcies in this country. Although this accounts for only a tiny percentage of individual insolvencies in the United States each year, it still puts more pressure on the system to strictly control the criteria for filing for bankruptcy. In other words, some Americans spend more than they can afford on purpose, purely to file for bankruptcy. This strategy eliminates some of their existing debts by allowing them to qualify for bankruptcy.
People or Companies?
Of everyone who files for bankruptcy, 97% are individuals. This is shocking when you consider the widespread belief that most defaults can be chalked up to corporate mismanagement. According to company bankruptcy statistics, company bankruptcies accounted for only 3% of the total. Although it may seem shocking at first, when you consider the incredible amount of medical bankruptcies that happen every day, it isn’t surreal.
If these statistics feel overwhelming, you aren’t alone. If you need financial advice or consulting for your situation, contact the professionals at Checkett, Pauly, Bay, and Morgan today.
Chapter 7 Bankruptcy Attorneys at Checkett, Pauly, Bay & Morgan
Talk to the bankruptcy attorneys at Checkett, Pauly, Bay & Morgan, LLC, about some tips to stave off Chapter 7 bankruptcy. Contact our law firm online or call for more information.
