USA Today reported that an as-yet-unreleased study by noted bankruptcy expert Elizabeth Warren finds that an increasing number of members of the middle class are filing for bankruptcy. Today, the typical bankruptcy filer is from the middle class.
In 2007, more than 100,000 middle-class families filed for personal bankruptcy every month. These families included high numbers of college-educated and homeowners. Almost 60 percent of filers in 2007 had attended college, and Warren predicts that the number would be much higher if calculated today. Unlike those in the lower classes, the middle class has had seemingly endless access to debt and has not done a good enough job using this access judiciously.
In the past, a college education and home ownership were seen as near guarantees of financial stability. However, that mindset bred overconfidence. The middle class spent too much, relied on debt, and figured that education guaranteed a job and that home equity would provide a buffer against bad times. But the tough job market and severe reduction in home values has debunked that theory and caused many to see bankruptcy as necessary in order to move forward.
