MIDDLE CLASS GOING BROKE?

May 30, 2006

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Seven months after a tough new bankruptcy law took effect, Americans have a better picture of those among us who are filing for bankruptcy while undergoing mandatory counseling, paying off creditors and putting their financial house in order:

_ The typical debtor seeking bankruptcy protection has an average income of $31,255 and average debts of $40,673, or about twice the debt of clients seeking voluntary credit counseling, the National Foundation for Credit Counseling reports.

_ Forty-four percent have incomes of less than $20,000 a year, and 31 percent say the source of their financial distress is “illness or injury,” according to an Institute for Financial Literacy survey.

_ Eighty percent lack the financial wherewithal to repay their creditors even a little of what they owe under the new law’s “means test” in which people who make half their state’s median income must make installment repayments to creditors, the National Association of Consumer Bankruptcy Attorneys reports.
By MARY DEIBEL
Scripps Howard News Service
24-MAY-06

MIDDLE CLASS GOING BROKE?