Demographics of Chapter 7 Debtors

Journal Issue

Sep 1999

Column Name

Bankruptcy by the Numbers

Journal HTML Content

As part of its ongoing research effort, the Office of Research and Planning of the Executive Office

obtained a sample of 1,452 recently closed no-asset chapter 7 cases, most of which were

originally filed in late 1998 or early 1999. The cases were gathered from 60 of the 84 federal

judicial districts served by the U.S. Trustee Program in proportion to the number of chapter 7

cases filed in each district during 1997. We reviewed the petitions to determine the gender,

marital status and family size of each of the debtors. Table I shows the results.

<center><h3>Table I</h3>

<th>Female

(individual)</th>

<th>Male

(individual)</th>

<th>Joint

Filing</th>

<th>Unknown</th>

<th>Total</th></tr>

<tr>

Total Cases

</center>

</td>

</tr>

<tr>

<td>Married</td>

</tr>

<tr>

<td>Separated</td>

</tr>

<tr><td>Divorced</td>

</tr>

<tr>

<td>Single*</td>

</tr>

<tr>

<td>Widowed</td>

</tr>

<tr>

<td colspan="6">*It is likely that some of the debtors who reported themselves as single were actually separated, divorced or widowed.</td></tr>

</tbody></table>

</center>

Filings by females and joint filings each account for about 35 percent of the total, while

filings by males accounted for the remaining 30 percent of cases. About 44 percent of the

debtors were married, 23 percent were previously married (separated, divorced or widowed),

and the remaining 33 percent reported themselves as single.

There are significant financial differences among the male, female and joint debtors. Joint

debtors have more dependents, much higher combined incomes, higher unsecured debt levels,

and are much more likely to be homeowners than either individual male or female filers. Their

debt-to-income ratios<a href="#1" name="1a">1</a> tend to be a little lower than individual filers.

Individual male debtors have higher incomes than individual female filers. Individual female

debtors are far more likely to have dependents than male debtors. However, one-quarter of the

individual male filers reported alimony or child support payments on Schedule J of their

petitions (Table II).

<center><h3>Table II</h3>

<th>Female</th>

<th>Joint Filing</th>

</tr>

<tr>

<td>Average Family Size</td>

</tr>

<tr>

<td>Percent with Dependents

(other than spouse)</td>

</tr>

<tr>

<td>Percent Disabled or Retired</td>

</tr>

<tr>

<td>Percent Homeowners</td>

</tr>

<tr>

<td nowrap="nowrap">Gross Income

Average

Median</td>

<td valign="bottom"><center>$19,716

$18,012</center></td>

<td valign="bottom"><center>$23,928

$21,420</center></td>

<td valign="bottom"><center>$37,992

$34,632</center></td>

</tr>

<tr>

<td nowrap="nowrap">Unsecured Debt

Average

Median</td>

<td valign="bottom"><center>$29,503

$19,613</center></td>

<td valign="bottom"><center>$39,928

$21,925</center></td>

<td valign="bottom"><center>$44,527

$27,725</center></td>

</tr>

<tr>

<td>Median Unsecured + Priority Debt-to-Income Ratio</td>

</tr>

<tr>

<td nowrap="nowrap">Child Support/Alimony

Percent Paying

Average Amt. Paid/Year</td>

<td valign="bottom"><center>2.8%

$78</center></td>

<td valign="bottom"><center>22.2%

$1,176</center></td>

<td valign="bottom"><center>8.7%

$417</center></td>

</tr></tbody></table></center>

Table III shows the same information for three subgroups of unmarried chapter 7 debtors:

males with no dependents, females with no dependents and females with dependents.

As a group, the females with no dependents had lower incomes, higher debt-to-income ratios and

were more likely to be disabled or retired. The income levels of the unmarried females with

dependents were about the same as the unmarried male debtors. Home-ownership rates were

comparable among the three subgroups.

More than one-quarter of the unmarried male debtors report making child support or alimony

payments. These payments amount to 6.3 percent of this group's total income, and 19.9 percent

of the income of those who are required to make payments.

<center><h3>Table III</h3>

<th nowrap="nowrap">Unmarried Males

(no dependents)</th>

<th nowrap="nowrap">Unmarried Females

(no dependents)</th>

<th nowrap="nowrap">Unmarried Females

w/dependents</th>

</tr>

<tr>

<td>Number of Cases</td>

</tr>

<tr>

<td>Percent of all Cases</td>

</tr>

<tr>

<td>Percent Disabled or Retired</td>

</tr>

<tr>

<td>Percent Homeowners</td>

</tr>

<tr><td nowrap="nowrap">Gross Income

Average

Median</td>

<td valign="bottom"><center>$21,912

$19,800</center></td>

<td valign="bottom"><center>$17,112

$15,792</center></td>

<td valign="bottom"><center>$20,760

$19,236</center></td>

</tr>

<tr>

<td nowrap="nowrap">Unsecured Debt

Average

Median</td>

<td valign="bottom"><center>$35,996

$21,700</center></td>

<td valign="bottom"><center>$34,172

$20,639</center></td>

<td valign="bottom"><center>$24,953

$17,970</center></td>

</tr>

<tr>

<td>Median Unsecured + Priority Debt-to-Income Ratio</td>

</tr>

<tr>

<td nowrap="nowrap">Child Support/Alimony

Percent Paying

Average Amt. Paid/Year</td>

<td valign="bottom"><center>25.4%

$1,387</center></td>

<td valign="bottom"><center>2.5%

$53</center></td>

<td valign="bottom"><center>3.2%

$94</center></td>

</tr></tbody></table></center>

Most unmarried debtors would be eligible for chapter 7 under pending means-testing proposals.

Only about 12 percent of the unmarried debtors in our sample exceed the gross income

threshold in H.R. 833, and application of the IRS Expense Guidelines would allow many of the

higher-income debtors to remain eligible for chapter 7.

<hr>

<h3>Footnotes</h3>

<a name="1">1</a> Total priority and general unsecured debt listed on Schedules E and F divided by 12 times the gross monthly income from all sources listed on Schedule I. <a href="#1a">Return to article</a>

Journal Authors

Edward M. Flynn

Gordon Bermant

Journal Date

Wednesday, September 1, 1999 - 12:00