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Bankruptcy filings among college grads on the rise

A new report says that the number of college educated and higher income earners who are filing for bankruptcy protection is on the rise. The Institute for Financial Literacy released the study's findings on Tuesday. The researchers say that between 2006 and 2010 bankruptcy filings among college graduates rose by 20 percent. The study indicates that bankruptcy filings among individuals earning $60,000 a year jumped by 66 percent during the five-year period. Also on the rise, bankruptcy filings entered by people who are married.

The researchers say the number of people filing for bankruptcy protection who are married rose above 60 percent in 2010; up from roughly 57 percent of filers in 2006. "The Great Recession has had a dramatic impact on the bankruptcy filings of American consumers across the economic spectrum-including college educated, high income earners," according to Leslie E. Linfield, the institute's executive director.

The data is based upon responses to a survey involving roughly 50,000 individuals that filed for chapter 7 or chapter 13 bankruptcy protection between 2006 and 2010. Each of the survey participants had sought credit counseling. The bankruptcy code generally requires individuals to participate in credit counseling through an approved provider in connection to the bankruptcy process.

Among those seeking debt relief through bankruptcy in 2010, 13.58 percent held a bachelor's degree, a 21 percent increase from the statistics recorded in 2006. The number of filers holding a high school degree fell in overall proportion of bankruptcy filers last year.

The researchers say 28.7 percent of all U.S. bankruptcies filed last year involved an individual who attended some college, but did not complete their degree. "This we suspect is because they have all the burdens of school related debt and none of the rewards of an actual degree," according to the study.

Source: Wall Street Journal, "Marriage, College, Job Won't Ward Off Bankruptcy," Eric Morath Sept. 13, 2011

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