Debt > Bankruptcy > States with Highest Bankruptcy Rates |
Researchers and bankruptcy experts have tried to find out why some states, such as Missouri, Indiana and Nevada, have bankruptcy filing rates that are double the national average while other states, such as South Carolina, Texas, and Alaska have such low bankruptcy filing rates. There has not been a clear connection found. For example: Unemployment: During the period examined above, Missouri had a lower unemployment rate than did South Carolina, Texas and Alaska, therefore, unemployment could not explain the variances in filing rates among state populations. Income: There is not a clear connection between income and bankruptcy either. Although states with higher incomes, such as Alaska and Connecticut, tend to have lower bankruptcy filing rates, this is not always true, since a few states with above average median incomes have above average bankruptcy filing rates. For example, Utah has a high median income rate, yet a high bankruptcy rate as well. Only one state with a high bankruptcy rate, West Virginia, also has a lower than average median income. In fact, West Virginia has the lowest median income of all 50 states. Medical Debt: A significant percentage of bankruptcies are caused by uninsured medical debt, so one might think that states with the highest filing rates would have the highest percentage of uninsured. This is not so. Texas, South Carolina and Alaska have significantly higher percentages of uninsured than do the states with the highest bankruptcy filing rate. Gambling: One might wonder if Missouri and Nevada's high bankruptcy rate might be due in part to the exceptional number of gambling venues and casinos available in these states. Researchers cannot pinpoint how many bankruptcies are due to gambling since most gamblers use credit card advances to fund their habit and this is not listed in their bankruptcy papers. But even if this were true, it doesn't help explain why Utah (a Mormon state with high median incomes and little gambling) is one of the states with the highest bankruptcy filing rates). State bankruptcy laws: There does seem to be a correlation between bankruptcy filing rates and state bankruptcy laws governing how much property a debtor can keep in bankruptcy. For example, Texas has a much lower than average bankruptcy filing rate and Texas state law is very generous towards debtors, allowing Texans to shield a big chunk of assets from creditor seizure or levy. For example, wage garnishments are prohibited in Texas for all debts except child support and it is virtually impossible for a creditor to go after a Texan's home. Therefore, few Texans would have the need to file bankruptcy. North Carolina has generous laws protecting debtors as well. Conversely, some states such as Delaware, are very creditor friendly. A debtor would not have much of an incentive to file bankruptcy if he resided in Delaware as he would have to turn over much of his property to the bankruptcy court, so he has much more of an incentive not to file. But then again, this does not explain why Utah, a state that does not have exceptional bankruptcy exemptions, also has a high bankruptcy rate. |
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States With the Highest and Lowest Bankruptcy Rates |
As of 2004, the average national bankruptcy filing rate is that 380 people out of every 100,000 will file bankruptcy. But if one breaks it down by state, there are some curious statistics. The table below lists the bankruptcy filing rates for the 10 states with the highest and the 10 states with the lowest rates of bankruptcy for 2000 - 2004. The rate is number of filings per 100,000 population. |
Our Bankruptcy Kit shows you how to use your state's property exemptions to complete your own Chapter 7 bankruptcy forms. << Order Bankruptcy Kit -- Get a Free Debt Kit and a Free Credit Kit Credit Kit -- Improve credit score and reduce monthly bills by $200+ Debt Kit -- Settle unsecured debts for less than half amount owed |
Highest filing rate: 700 Missouri 690 Indiana 670 Nevada 620 Utah 610 Oklahoma 580 Oregon 560 Idaho 540 Kentucky 540 Ohio 530 West Virginia |
Lowest filing rate: 290 New York 280 Connecticut 270 New Hampshire 250 Vermont 240 Delaware 230 Massachusetts 200 North Carolina 200 Alaska 190 Texas 160 South Carolina |
Researchers and bankruptcy experts have tried to find out why some states, such as Missouri, Indiana and Nevada, have bankruptcy filing rates that are double the national average while other states, such as South Carolina, Texas, and Alaska have such low bankruptcy filing rates. There has not been a clear connection found. For example: Unemployment: During the period examined above, Missouri had a lower unemployment rate than did South Carolina, Texas and Alaska, therefore, unemployment could not explain the variances in filing rates among state populations. Income: There is not a clear connection between income and bankruptcy either. Although states with higher incomes, such as Alaska and Connecticut, tend to have lower bankruptcy filing rates, this is not always true, since a few states with above average median incomes have above average bankruptcy filing rates. For example, Utah has a high median income rate, yet a high bankruptcy rate as well. Only one state with a high bankruptcy rate, West Virginia, also has a lower than average median income. In fact, West Virginia has the lowest median income of all 50 states. Medical Debt: A significant percentage of bankruptcies are caused by uninsured medical debt, so one might think that states with the highest filing rates would have the highest percentage of uninsured. This is not so. Texas, South Carolina and Alaska have significantly higher percentages of uninsured than do the states with the highest bankruptcy filing rate. Gambling: One might wonder if Missouri and Nevada's high bankruptcy rate might be due in part to the exceptional number of gambling venues and casinos available in these states. Researchers cannot pinpoint how many bankruptcies are due to gambling since most gamblers use credit card advances to fund their habit and this is not listed in their bankruptcy papers. But even if this were true, it doesn't help explain why Utah (a Mormon state with high median incomes and little gambling) is one of the states with the highest bankruptcy filing rates). State bankruptcy laws: There does seem to be a correlation between bankruptcy filing rates and state bankruptcy laws governing how much property a debtor can keep in bankruptcy. For example, Texas has a much lower than average bankruptcy filing rate and Texas state law is very generous towards debtors, allowing Texans to shield a big chunk of assets from creditor seizure or levy. For example, wage garnishments are prohibited in Texas for all debts except child support and it is virtually impossible for a creditor to go after a Texan's home. Therefore, few Texans would have the need to file bankruptcy. North Carolina has generous laws protecting debtors as well. Conversely, some states such as Delaware, are very creditor friendly. A debtor would not have much of an incentive to file bankruptcy if he resided in Delaware as he would have to turn over much of his property to the bankruptcy court, so he has much more of an incentive not to file. But then again, this does not explain why Utah, a state that does not have exceptional bankruptcy exemptions, also has a high bankruptcy rate. |
Debt > Bankruptcy > States with Highest Bankruptcy Rates |
