The middle class is increasingly resorting to bankruptcy despite college education, home ownership and other historical signs of success, according to a new study.
While the middle class's investments in higher education and real estate have typically shielded them from the hardest economic storms, that is no longer the case.
"The Vulnerable Middle Class: Bankruptcy and Class Status," a new study by Elizabeth Warren, Harvard Law School Leo Gottlieb professor of law, and Deborah Thorne, Ohio University associate professor of sociology illustrates how bankruptcy demographics have changed in recent decades.
An exclusive preview of Warren and Thorne's new book by USA Today shows how bad mortgages, rising unemployment, and the trappings of success led millions of Americans into debt.
Warren and Thorne compared annual bankruptcy filings from 1991 through 2007, and saw an increasing trend of middle class Americans, dispelling the myth that bankruptcy was a tool for the destitute or extreme spenders.
The article profiles several bankruptcy filers, including a single mother who went from earning $275,000 a year to filing bankruptcy after starting her own business, as well as a couple nearing retirement whose dropping home value left them without a safety net.
The study's authors admit that much of the data comes from recent "boom" years, and ends at the same point the recent recession began.
They expect that looking back at the past two years—and likely into the future—will show an even greater upswing in middle class Americans turning to bankruptcy protection.
Tags: bankruptcy statistics, middle class
This entry was posted on Thursday, November 19th, 2009 at 5:20 pm and is filed under Setting the Record Straight about Bankruptcy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
It is my personal belief the the beginning of the loss of the middle class started with Regan. He supported free markets with only a superficial m odicum of accountability. Daddy Bush followed suit with legal benefits for the corporation with large tax benefits and loopholes for the corporation as “incentives”. Clinton got caught up in the internet craze which no one wanted to stifel, but that allowed further loosening of restrictions and little to no accountability, and more incentives to start-up internet companies.
THen comes Georgie Bush - backed completely bay the “Bush Corporation” who virtually eliminated ALL requirements for accountability, encouraged the huge increases in CEO pay and incentives, all the while allowing a philosophy to that in order to “keep” key people who are necessary to head up the large corporations, particularly banking/lending/investing corporations who now believe that they cannot survive unless they pay their CEO these ridiculous sums of money as incentive for them to stay with the company since, apparently the company could not survive without their expertise. And yes, these are the SAME CEOs who drove these companies into the ground, who failed at every step - BUT who also KNOW how to “earn” great sums of money for their companies because of their connections with the “pther” Good-ole-boyz at the other corporations world-wide. These same CEOs who couldn’t even run a birthday party for a 6 yr. old, are so valuable that their contacts CANNOT be breached so that they can receive the amount they have REALLY earned? - NOTHING? Have you ever seen so may people FAIL and still be rewarded to the degree that these people are? And when it is time to put money into a failing system - caused by these same CEOs who were so greedy that they agreed to/approved the predatory lending tactics that have gotten us to where we are - in a financial system completely run by these incompetent, worthless people who large corporations swear they cannot live without. (unless you accept fraudulant practices as competency)Wall Street RUNS the country, NOT the federal government. All that the fed. govt. does is pour money into a large black hole of greed held onto and maintained by self-centered greedy dictators who play games with the numbers as they choose, spend money to service their own INDIVIDUAL needs and NOT the needs of the people of the country. - Why should they? They certainly don’t have to. And all of their friends are the same way, so who cares if millions of people l ose their homes, their livlihoods and virtually everything they have. The guys at the top are doin great! Madoff just got caught. The others haven’t yet. There is a dwindling to NO middle class. If we do not DO SOMETHING about supporting the middle class in lieu of Wall Street, there will be NO MIDDLE CLASS LEFT. But, so waht!
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It’s important to remember, though, that bankruptcy is different than being broke.
http://en.wikipedia.org/wiki/Bankruptcy
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