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Higher Earning Americans Increase Bankruptcy Filings

The Wall Street Journal reports that the recession has hit people from all walks of life. The number of people filing for bankruptcy protection this year is expected to include more than a million and a half Americans.

It is more common for bankruptcy filers to earn more than $30,000 per year and to have a college degree than prior to the beginning of the recession. Experts say 20 percent of bankruptcy filings in 2009 were filed by people with college degrees earning more than $30,000. That is a 4.1 percent jump over data from 2006. Over nine percent of filers earned in excess of $60,000 last year, an increase from 5.5 percent in 2006.

Bankruptcy expert, and visiting Harvard law professor Katherine Porter says bankruptcy can help consumers "take some of the debt pressure off" through seeking bankruptcy relief. Bankruptcy is known as a fresh start. Porter says bankruptcy "is a step forward, but it's not a leap forward."

Unemployment remains high and some employers run credit checks on prospective employees. Some apartment building managers also check a person's credit history before renting out an apartment.

Having a bankruptcy appear on a credit report however is not necessarily the end of the inquiry for some managers. Donald Davidoff is the vice president of a group that operates roughly 70,000 apartments across the country. He says "there are good bankruptcies and bad bankruptcies." He says "if someone has a bankruptcy but it's clear he didn't just go on a credit binge there's still a chance we'll rent him an apartment."

Bankruptcy laws changed in 2005, but then the recession hit. Many people have been caught up in the tough economy and have filed for protection from creditors under the bankruptcy code.

Source: Wall Street Journal, "Rebuilding Lives After Bankruptcy," Sara Murray, Joe Light, 26 Nov 2010

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