Filers Most Likely in 25-44 Age Range (2024)

Journal Article:

Debtors are not required to report their age on Schedule I of their bankruptcypetitions, but some do. Our research database contains 1,931 no-asset chapter 7cases that were closed in 2000. Debtors in 390 of these cases reported theirage on Schedule I. Including joint debtors, we obtained the ages of 539 debtorsor joint debtors of the 2,595 in our database.

With only about a 20 percent age reporting rate, we cannot be sure that thedebtors who reported their age are representative of the debtors who did not. However,as noted in Table 1, their financial profiles were fairly close to that of the typicalno-asset chapter 7 debtor. The main difference is that joint debtors were somewhat morelikely to report their ages than non-joint filers. This resulted in our sub-sample'shaving a higher proportion of homeowners, and a slightly larger average family size.

The average age of the debtors was 40.9 years. Their median age (one-halfwere older and one-half were younger) was 39. The youngest reported age was 19,and the oldest was 92. Table 2 compares the age of the reporting debtors with thedistribution of ages of the adult population in the United States. The final columnis computed by dividing the second column (percent of debtors) by the third column(percent of U.S. adults) and multiplying the result by 100. Values of less than100 reflect fewer-than-expected debtors in that age category, and values of morethan 100 reflect a greater-than-expected number of debtors in that age group.

The data indicate that the ages of 25-44 are the peak years for filingbankruptcy. People between the ages of 45 and 59 file at about the rate thatwould be expected by their proportion in the population at large. Filings in the18-24 age range are less than one-half the expected rate, and the rate forpeople aged 60 or older is less than one-third the expected amount. These figuresare consistent with those developed by Professors Sullivan, Westbrook and Warren thatwere cited in a recent report by the General Accounting Office.²

The financial profiles vary somewhat according to the age of the debtors. Table 3compares the circ*mstances of debtors of different ages. In this table, for jointfilings the age category is based on the age of the first listed debtor. Allfinancial figures represent the mean or average figure. We also computed, but do notshow here, the median figures. The medians follow the same basic patterns as themeans, with one exception. The median unsecured debt for debtors age 60 or moreis higher than the median for all other age cohorts.

Debtors in their 20s were nearly all employed, and reported somewhat lower assetand debt levels than other debtors. Employment levels were also high for debtors intheir 30s, and they had the largest average family size for any age cohort.Compared to debtors of other ages, the debtors in their 40s have the highest grossincomes, and the highest amounts of real and personal property and secured andunsecured debt. Average family size and employment levels begin to drop for debtorsin their 50s. Additionally, slightly lower homeownership rates in this age cohortled to lower real property and lower secured debt. Relatively few debtors aged 60or older are employed, so gross monthly income is much lower. Homeownership is high,and many have some equity in their homes because they are the only age cohort whoseaverage real property is worth more than their secured debt. Nearly all of theirgeneral unsecured debt is from credit cards, and total credit card debt among thereporters in this age group is nearly twice their annual income.

Credit Card Debt by Age

Credit card debt levels increased steadily based on the age of the debtors. Creditcard debt levels were relatively low for debtors under the age of 25. However,these amounts were twice as high for debtors in their mid-30s, three times as highfor debtors in their 50s, and about 5 times as high for debtors 60 or older.

Student Debtors

There have been reports of high levels of credit card debt and financial distressamong college students.³ While many students may have become overextended or haveoverused the credit available to them, our data indicate that very few are filing forchapter 7 bankruptcy. As noted above, filings were relatively low among the19-to-24-year-old portion of the population, and their credit card debt levelstended to be much lower than for other debtors. Moreover, out of 29 debtors aged19-24 in our database, only two were students. In fact, most of the debtorsin the youngest category were employed in clerical, sales or blue-collar jobs, andabout one-half reported having one or more children. Only three of these debtors hadany student loan debt, and there was no evidence on the remaining petitions that anyof the other debtors in this age group had dropped out of college.

Conclusion

Our data, which we cannot be certain is representative of all chapter 7 individualdebtors, indicates that of the reporting age group:

• The peak bankruptcy years are 25-45;
• Average incomes of debtors are about the same for all ages, except for debtorsaged 60 or older;
• Nearly 90 percent of debtors under age 40 are employed;
• Debt, asset and income levels are highest for debtors in their 40s;
• Credit card debt increases with age, and accounts for the vast majority of totalunsecured debt reported by debtors 60 or older; and
• Chapter 7 filings by college students are infrequent.

Footnotes

¹ All views expressed in this article are those of the authors, and do not necessarily represent the views of the Executive Office forU.S. Trustees or the Department of Justice. Return to article

² General Accounting Office, "College Students and Credit Cards," GAO 01-773, June 2001. Return to article

³ For example, one widely quoted statement from an Indiana University administrator was, "We lose more students to credit card debt thanacademic failure." The Chicago Tribune, Aug. 16, 1998. Return to article