In the early nineteen eighties we had about three hundred thousand bankruptcies in the
united states last year annually last year we hand up now one point six million families who filed for bankruptcy that’s about five hundred percent increase
that’s right and what you want to note about these families is that they or in terrible financial trouble
at the time they filed for bankruptcy on average the family to file for bankruptcy owe more than a years worth of income well the average family filing for bankruptcy has lower income at the time they file for bankruptcy more in the range of about thirty thousand
dollars a year you really have no options if they don’t file
for bankruptcy the interest rate is running so that if they don’t charge you know they
think they don’t incur another debt they nonetheless next month will more the mayor of this month the month after that a little more in the
month after that bill for most of the families who filed for bankruptcy it really is just a declaration of financial
death they can’t go on any longer and that’s how they ended up in bankruptcy %uh a little quicker calculation here tells
me that %uh I think that the population united states has increased from two hundred forty million to roughly three
hundred million since nineteen eighty one so the population has gone up twenty five percent
0:01:47.170,0:01:50.670 or another way of it saying is that the rate of filing per thousand population that’s just about quadrupled yeah in a little over twenty years in united
states and that you know we should add to this it’s important to note the bankruptcy numbers
a personal loan the bankruptcy numbers you just one signal
for the kind of trouble American families have been take a look at home mortgage foreclosure rates
is that people you have passed the most %uh vigorous credit screen that we have for
consumers in the united states and what’s happened at home mortgage foreclosures
over the last twenty five years they’re up three and a half fold that’s remarkable particularly because interest
rates are low today and house prices are strong so then you get into financial trouble if
you’re a homeowner many people can just back out of it and sell
the house to someone else unless it’s to loaded down with debt we’ll come back to that because
one of your many significant points is that %uh even if it is currently
one of the most significant credit expected to pass the united states it’s not much of
a credit check anymore %uh you if you make the point early on in
your book that that bankruptcy is guess it’s fair to say predominantly or at least largely a middle class phenomenon if you have any statistics showing that
sure most people define middle class by income
income and by income I will be the first to confess
a large proportion of the families in bankruptcy look like they’re poor or of ragged image
of the working class middle class but income alone doesn’t really define middle class
a fourth grade teacher lost her job and was out of work for a year would
you describe her as not middle class any longer if a bank President %uh lost his job would you describe him as has not middle class
and longer if we look at at the enduring criteria education occupation having bought a home it turns out that the population in bankruptcy
is disproportionately middle class so if we take anyone who went to college that’s some indication of the middle class anyone who has an occupation in the upper
eighty percent of occupations in the united states that is
cutting out day laborers and house maids and the lower status
jobs or anyone who actually went out and bought
a home as middle class our population bankruptcy is more than ninety percent middle class in other words when we look at the families were filing for
bankruptcy it’s not the very poorest and of course it’s
not the very richest we underrepresented brain surgeons and now college professors but we also under represent day laborers and shop clerks bankruptcy is about the middle class and the
kind of financial trouble that the middle class faces