Progress 01/01/04 to 06/30/06
Outputs
Utah Consumer Bankruptcies: Why Do We Lead the Nation? From 2002-2004 Utah ranked first in the nation in bankruptcy filings in relation to the number of households. Data collected by bankruptcy courts do not reveal the reasons why the debtor filed. To ascertain the reasons for filing, a questionnaire was developed based on Sullivan, Warren and Westbrook (1989). The objectives were to describe a financial and demographic profile of Utah Chapter 7 and Chapter 13 debtors; compare debtors to the Utah population; identify reasons for filing bankruptcy; and compare Utah debtors to bankruptcy filers in other districts. Questions addressed the reasons for filing, events leading up to the bankruptcy, who the debtor owed, type and tenure of employment and demographics. First, a list of reasons for filing was included in the survey where they could check all that apply. Second, the final question was open-ended and invited the debtor to explain the reasons for their bankruptcy.
During Spring and Summer 2005 data were collected from 481 debtors at the meeting of creditors. Only 87 debtors refused to participate, mainly due to language difficulties. Two-thirds (N=345; 65.3%) of debtors filed for chapter 7 debt liquidation; 136 (30.9%) filed a chapter 13 repayment plan, reflecting the current distribution of filings within the state. There were more male filers, with 264 males (52.7%), and 237 females (47.3%) responding as the primary debtor. Of the 282 debtors filing alone, 125 were male and 157 were female. The largest educational category was some college (41.1%); 15.7% did not graduate from high school. Only 11.0% earned a bachelor's degree or higher. Half the respondents reported being married; a change in marital status over the last two years was reported by 16.6%. Median age was 37. Debtors deviate from the general population; they are less well educated, less likely to own a home, more likely to be single, and less likely to be of the LDS religion.
Active Mormons were underrepresented among debtors in relation to their portion of the state population. The most common causes for filing were: job problems, credit cards, trouble managing money, illness or injury, aggressive collectors, and divorce/family problems. About 46% experienced an income interruption in the 2 years before filing. The self-employed were overrepresented. Almost 25% reported tax problems as a contributing factor. Job tenure for the debtors was short with employment at their current job for a median of 3 years; the modal job tenure was one year. Many debtors (46.7%) had medical debts that exceeded $1000 although most (76%) had health insurance. In addition to mortgage and vehicle debt, one-third were behind on utility payments, one-fourth owe back taxes and 17% owe payday loans. Utah debtors clearly had trouble managing money and credit, indicating a need for more financial education and information. An important finding of this study is that Utahns who file
for bankruptcy are not a mirror image of the general population. They are less educated, less likely to be homeowners, less likely to be married, and more likely to be single parents.
Impacts
This profile of Utah bankruptcy filers will assist Extension educators and others offering bankruptcy prevention education to target at-risk populations: renters, low-income employees, the self-employed, single parents and divorcing persons. Policy makers need to focus on the triggers of job loss and un- or under-insured medical expenses. Personal finance should be mandated for middle school students as well as for high school graduation.
Publications
- No publications reported this period
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Progress 01/01/05 to 12/31/05
Outputs
During Spring and Summer 2005 data were collected from 481 debtors at 341 hearings. Two-thirds (N=345; 65.3%) of debtors filed for Chapter 7 debt liquidation; the remaining 136 respondents (30.9%) filed a Chapter 13 repayment plan. Data are being analyzed to determine the demographics of debtors, reasons for filing and events leading up to the bankruptcy. A preliminary analysis of the debtor profile indicates they deviate from the general population based on education and religion. About 15% of debtors report a change in marital status and 46% experienced an income interruption in the 2 years prior to filing. In addition to mortgage and vehicle debt, one-third were behind on utility payments, one-fourth owe back taxes and 17% report pay-day loans at the time of filing. In a check list of reasons for filing the fours most common causes, in descending order, were: job problems, credit cards, trouble managing money, and illness or injury. A poster presentation based on
this preliminary sample has been accepted for presentation at the annual conference of the American Council on Consumer Interests in March 2006. A journal manuscript describing these debtors is in progress. Additional data will be collected from debtors during Spring 2006. These debtors will have filed after the new bankruptcy reform legislation went into effect in mid-October. Data from the two groups of debtors will be compared to determine if they differ in demographics or financial situation.
Impacts
Most Utah bankruptcy filers report a lower education level than the Utah population. This finding contradicts previous research that concluded debtors come from all economic and educational levels. Until now bankruptcy prevention education activities in Utah were based on this previous model. The USU Extension bankruptcy prevention education team can use the results of this to target Utahns with lower educational attainment. Educational resources to prevent bankruptcy can be targeted efficiently to groups most at risk.
Publications
- No publications reported this period
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Progress 01/01/04 to 12/31/04
Outputs
Data are still being collected from debtors at the 341 hearings in Ogden and Salt Lake City. Data collection did not begin until October 2004 because there was no qualified graduate student available to travel to the bankruptcy court hearings until then. About once a week, weather permitting, data are collected from the chapter 7 and 13 hearings. Each trip takes an entire day due to the travel time so data cannot be collected on days when the graduate student has classes. By mid December, 2004 103 surveys had been collected. The data from the surveys are being entered into the SPSS program for analysis on a weekly basis.
Impacts
The results of the study will be of interest to USU Extension educators and administrators, social service agencies such as United Way, the Utah Foundation, state legislators, banks, credit unions and other lenders, credit counselors, as well as civic and religious leaders. A group of Utah professionals concerned about our #1 bankruptcy filing rate are currently meeting to develop a research proposal to answer the question of why we rank first in the nation. The researchers for this project are working with this team to plan future research. The researchers will propose ways to reduce not just the bankruptcy filing rate but problem of over-indebtedness in Utah.
Publications
- No publications reported this period
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