Who is the typical composite of a Consumer Debtor?

Leslie Linfield, of the Institute for Financial Literacy, collected date and demographics to answer the simple yet unanswered question of who the “normal” Debtor is. By looking at demographics of people completing credit counseling and financial management courses, she was able to come up with data on the types of people filing for bankruptcy.

In order to determine the composite consumer debtor we first need to understand what the word composite means. “Composite” by definition is a combination of typical or essential characteristics of individuals in a specified category or group. In order to come up with a typical sample we need to first look at all of the parts:

During the sample period, (2006-2010), 52.9% of Debtors were female; slightly higher than males at 47.1%. This is not surprising given than women make up 50.8% of the U.S. according to the U.S. Census Bureau.

Debtors ages 34 and younger have declined; while Debtors aged 45 and older have increased by 19%. Surprisingly 55+ age groups have a combined filing increase of 25%.

Caucasian Debtors make up 72% of the filing population. Asian Americans filings have increased by 114% over the sample period. Hispanics and Latinos debtors have increased filings by 33%.

56% of all Debtors have some form of higher education; this includes degree holders and individuals who started college but did not graduate.

The majority of Debtors fall into the annual income of $40,000 or less. However, Debtors earning income of $60,000+ have increased by more than 66% during the sample period.

The recession appears to have affected the employment status of Debtors. The majority of Debtros are employed at the time of their bankruptcy being filed. However, since the recession, there is a reported 27% increase in Debtors filing bankruptcy while collecting unemployment. Another group of individuals affected are those that are self-employed. Self-employed Debtors filings have increased by 29%

Marital Status
62% of those filing bankruptcy during the sample period were married. This is a 23% increase from previous years.

Reasons for filing
The most common reasons for filing bankruptcy during the sample period of 2006-2010 were reduction of income, job loss and an overextension of credit.

So who is the typical Debtor?
Based on the statistics the most common Debtor during the sample period was a white, married couple in their mid to late forties who have attended or graduated from college and are both working with an earned income of approximately $40,000 per year.