Bankruptcy

How Much Credit Card Debt Do Bankrupt Consumers Have?

By Angie Littwin

We here at Credit Slips frequently get asked the question, Just how much credit card debt do people filing for bankruptcy actually have? So as a public service of sorts, I?m going to begin answering it. I say ?begin? answering it because, even though our data comes directly from court records ? a reliable source if there ever was one ? it is not always possible to tell whether a given debt was acquired via credit card. For example, a debt listed as being owed to J.P. Morgan may be from a credit card or may be from a signature loan the debtor got at the bank. On the other hand, we do think our numbers are as accurate as they can be. We coded 10 percent of our cases twice in order to check for discrepancies and found them only 0.8% of the time.

With those caveats in mind, according to data from the 2007 Consumer Bankruptcy Project, the mean credit card debt for bankruptcy filers is $23,543, with a median of $13,279. Among chapter 7 filers, the mean credit card debt was $26,267 and the median $17,032. For chapter 13, those numbers were $18,076 and $6,079, respectively. This actually seems fairly modest when you consider that, by the end of 2008, the average accredit-card balance was $8,329, more than a quarter the average bankruptcy total of $23,543. In addition, 7.9% of our chapter 7 filers and 18.2% of those in chapter 13 reported no credit card debt at all. In the general population, 53.9% of Americans held no credit card debt ? a much larger difference.  Again, it is important to repeat the caveat that our count of credit card debts may have missed some, although the 53.9% figure comes from the Fed?s Survey of Consumer Finances, which may have miss some credit card debt as well.

These data are from the 2007 Consumer Bankruptcy Project, the first national random sample of bankruptcy filings by consumers. For details on how the database was constructed, please click here and go to Appendix I of the article.

Full post as published by Credit Slips on August 13, 2009 (boomark / email).