PORTLAND, Maine — To get a general snapshot of bankruptcy demographics, the Institute for Financial Literacy said it surveyed clients who are in financial distress and seeking credit counseling and financial education.

After questioning more than 24,000 Americans seeking their servicing, the nonprofit, Maine-based group found that the average consumer seeking credit counseling and financial education is Caucasian, married, employed, 35 to 44 years old and has high school education, if not some college. Moreover, the person makes $30,000 a year or less.

As many in the industry are aware, the new bankruptcy requirements that went into effect in 2005 made it necessary for consumers to get credit counseling prior to filing for bankruptcy. Therefore, while not all consumers signing up for the institute's services may be doing so in preparation for bankruptcy, officials believe that there's a good chance that many of them will.

The report was based on consumers signing up for the group's services in 2006.

"During the years prior to the passage of the BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act) there was much rhetoric and little comprehensive research cited with regard to the demographics of consumer bankruptcy," noted Leslie Linfield, executive director of the IFL.

"As a result, the Institute for Financial Literacy recognized the importance of establishing a comprehensive, neutral research program to better understand those individuals contemplating bankruptcy, as well as those who eventually seek bankruptcy protection," Linfield continued.

"It is the intention of the Institute for Financial Literacy to publish out annually the results of its demographic survey, monitor any substantive changes in those results and encourage the research and academic community to use this data to find the causes and possible solutions behind America's ever-growing debt problem," Linfield reported.

The categories covered in the survey included gender, age, ethnicity, educational background, personal income, employment, marital status and causes of financial distress, according to the institute.


The IFL discovered that the majority of consumers considering bankruptcy were females.

In fact, the study found that 53.6 percent, or 12,888, of those questioned were female. On the other side of the coin, 46.4 percent, or 11,150, of participants were male.

Comparing these findings to the general population, the IFL noted that 51 percent is female and 49 percent male.

"What is of interest is the different between the percentages of women seeking counseling and/or education (53.8 percent), as compared to their representation of the U.S. population (51 percent)," Linfield noted. "The question becomes why are women (since at least 2001 when the Executive Officer for the U.S. Trustree Program research was published) financially struggling at greater rates than their male counterparts?"


In a breakdown of age ranges, the IFL reported that 3.3 percent, or 780, of consumers questioned indicated they were 18 to 24 years old, while 21 percent, or 5,026, were 25 to 34 years old.

Continuing on, 29 percent, or 6,922, of participants said they were 35 to 44 years of age; 24.9 percent, or 5,952, were 45 to 54 years of age; and 14 percent, or 3,355, were 55 to 64 years of age.

Finally, 7.8 percent, or 1,853, identified themselves as 65 years of age or older.

"Most recently, research conducted by two government researchers at the Administrative Office of the U.S. Courts found that bankruptcy filings by Americans aged 55 and above are rising at a greater pace than that of the general population," Linfield said.

"Their data compared bankruptcy petitions filed from the years 1994 to 2002. Their findings are consistent with the institute's findings," the executive added.

Comparing the statistics to the first report by the institute, which was completed shortly after the new bankruptcy law went into effect and only covered a few months, the executives found some changes.

"Compared to the institute's first report, there has been some shifting within the 25 to 34 age group, the 45 to 54 age group and the 65 and older group," Linfield pointed out.

In the first report, 22.7 percent of those questioned said they were 25 to 34 in age, whereas in the latter survey, 21 percent said they fell into that category. In the 45 to 54 age group, 22.4 percent reported they were between those ages in the earlier study, while 24.9 percent said they fell into that range in the subsequent survey. Finally, when it came to the 65 and older group, 8.9 percent of participants said they fell into that age category in the first study, whereas in the second report, 7.8 percent were in that range.

"Even with the shifting, however, there clearly appears to be a bell curve effect around those seeking credit counseling and financial education," the executive said.

In fact, looking at the statistics, the highest group of consumers who have sought credit counseling and financial education help from the institute fell into the ages of 25 to 54.

"What is of interest is that the U.S. population does not demonstrate the same bell curve effect between the ages of 25 and 54 but remains rather constant at approximately 14 percent," Linfield explained. "The recently published AO (Administrative Office of the U.S. Courts) research found that between 1994 and 2002, the median age for bankruptcy petitioners has shifted upwards from 37.7 years to 41.1 years, respectively."


Reviewing the ethnicity of those seeking credit counseling and financial education with the institute, the group discovered that the highest population was Caucasian at 72.6 percent.

Next in line came African-American at 15.3 percent, 6.6 percent indicated they were Latino, 2.1 percent said they were Asian, 1 percent came in at Native American and 2.4 percent identified themselves as "other."

"There appears to be a statistically significant variation between bankruptcy filings and proportion of the population for both the Caucasian/white and Latino/Hispanic categories," Linfield said.

"However, this variation may be a result of the difference in the data collection instruments, as the institute respondents may choose only a single ethnicity category, while the U.S. Census Bureau allows those of Hispanic origin to choose a second appropriate ethnicity category," Linfield continued.


The majority, or 39.7 percent, of consumers who contacted the IFL for assistance and agreed to be interviewed said they came at the high school/GED level in terms of education.

More specifically, 4.9 percent, or 1,174, fell into the graduate level; 11.2 percent, or 2,675 were in the bachelors level; 8 percent, or 1,910, were in the associates level; 29.9 percent, or 7,129, identified some college; 39.7 percent, or 9,449, indicated the high school/GED level; 5.9 percent fell into the primary school level; and 0.4 percent said they had no education.

As many may suspect, the institute's findings indicated a correlation between education level and financial distress.

"Individuals with more advanced education seem to have lower incidents of seeking credit counseling and financial education when compared against their proportion of the U.S. population," Linfield said.

"The total percentage of respondents holding an associate degree or higher was 24.1 percent, compared with 30.7 percent of the U.S. population," the executive continued. "Clients with a high school degree/GED or some college constituted 69.6 percent of the respondents, compared with 49.7 percent of the U.S. population."


When broken down by category, by far the majority of people looking for financial help, 41.16 percent (9,511), said they earn less than $20,000 per year.

Continuing on, 24.5 percent, or 5,659, said they earn between $20,000 to $30,000 each year; 15.1 percent, or 3,490, indicated they earn $30,000 to $40,000 per year; 8.8 percent, or 2,040, reported they earn $40,000 to $50,000 per year; 5 percent, or 1,152, said they earn $50,000 to $60,000 each year; and 5.5 percent said they earn more than $60,000 per year.

"What does appear to be emerging from the data being collected is that the majority of those who are in financial distress and possibly seeking bankruptcy protection appear to fall below the median income as reported by the U.S. Census Bureau. The median household income for the United States in 2004 to 2005 was $46,071 (Census Bureau)," Linfield explained.

"The reported state-by-state range fluctuates with Mississippi's median income coming in at a low of $34,396 and Maryland's at a high of $59,762. This is relevant with the new Means Testing requirement that BAPCPA put into effect," Linfield pointed out.


Reviewing the employment categories, most study participants, 63.7 percent (15,186), said they were employed.

Another 13.1 percent (3,135) said they were unemployed, 9.4 percent (2,240) were retired, 8.3 percent (1,978) identified themselves as self-employed, 4.5 percent (1,068) reported themselves as a homemaker, and 1 percent (233) said they were a student.

Marital Status

A total of 57 percent, or 13, 654, of those questioned when seeking financial assistance reported they were married; 21.9 percent, or 5,229, said they were single; 19.9 percent, or 3,810, indicated they were divorced; 3.9 percent, or 933, said they were widowed; and 1.2 percent, or 286, identified themselves as cohabitating.

Discussing the study, Linfield said, "It is not known how many respondents who sought credit counseling services actually filed for bankruptcy as of the date of this writing. It is worth noting that, pursuant to section 109(h)(1), any certificates issued by an approved nonprofit budget and credit counseling provider are valid for a 180-day period from the date of the delivery.

"Therefore a consumer who sought out credit counseling on Dec. 31, 2006 would have until June 29, 2007 to file a bankruptcy petition before being required to retake a credit counseling session," Linfield noted.