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The rate of bankruptcy filings (per 100,000 people in the population) dramatically increased United States between 1990 and the early 2000’s, and the number of filings continues to rise. Over 1.5 million bankruptcies were filed in the past year. In the past 12 months (ending March 31, 2010) there was a 27% increase in the number of filings over the previous year. Arizona experienced the largest increase (69%) and Nevada had the highest rate of filing (11.7 per 1,000 people).
Most people who go bankrupt are homeowners who can no longer pay their debts, often because of family dissolution or medical emergencies. A study conducted by
Elisabeth Warren and her colleagues at the Harvard School of Public Health found that the average out-of-pocket medical debt for people who filed for bankruptcy is $12,000. A study by Steffie Woolhandler, M.D. and colleagues of the Harvard Medical School
concluded that the percentages of bankruptcies filed due to medical expenses increased from 46% in 2001 to 62% in 2007 and that 75% of people with a medically-related bankruptcy had health insurance. The report also indicates that most of the people who filed for bankruptcy were middle-class, well-educated homeowners.
While not everyone agrees that medical expenses are the primary cause of such a large percentage of bankruptcies, such expenses can certainly add to an already difficult financial situation.
Saving in the USA?
Long before the recent housing crisis, U.S. personal savings rates provided a cause for concern. In the 1960’s the personal savings rate ranged from 7.2% to 9.4%. In the 1990’s, that rate varied from 3.1% to 7.3% and during the period from 2000 to 2009, the personal savings rate had dropped to between 1.4% and 4.2%. Latest data from the Bureau of Economic Analysis shows that the personal savings rate in April 2010 was 3.6%, up from 3.1% in March 2010.
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