Who Declares Bankruptcy
The individuals and business who file for bankruptcy have far more debts than money to cover them and don’t see that changing anytime soon. In 2019, bankruptcy filers owed $116 billion and had assets of $83.6 billion, almost 70% of that was real estate holdings, whose real value is debatable.
What is surprising is that people – not businesses – are the ones most often seeking help. They have taken on financial obligations like a mortgage, auto loan or student loan – or perhaps all three! – and don’t have the income to pay for it. There were 774,940 bankruptcy cases filed in 2019, and 97% of them (752,160) were filed by individuals.
Only 22,780 bankruptcy cases were filed by businesses in 2019.
Most of the people filing bankruptcy were not particularly wealthy. The median income for the 488,506 individuals who filed Chapter 7, was just $31,284. Chapter 13 filers were slightly better off with a median income of $41,532.
Part of understanding bankruptcy is knowing that, while bankruptcy is a chance to start over, it definitely affects your credit and future ability to use money. It may prevent or delay foreclosure on a home and repossession of a car, and it can also stop wage garnishment and other legal action creditors use to collect debts, but in the end, there is a price to pay.
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