Are the Wrong People Filing for Bankruptcy?
Ronald J. Mann and Katherine Porter's recent study reveals some interesting patterns in consumer bankruptcy. For instance, only a small fraction of those families in the greatest financial distress seek bankruptcy protection. In fact, few of those facing foreclosure attempt to use bankruptcy to save their homes. Meanwhile, many of those who do file for bankruptcy protection are so "mired in poverty" that they gain little financial advantage from the discharge.
Combining data culled from judicial records with interviews with industry professionals and data from the 2007 Consumer Bankruptcy Project, Mann and Porter examine the triggers that actually bring about the decision to file for bankruptcy. Generally, with the exception of foreclosure-related filings, the researchers determine that few bankruptcy filing are emergent: aggressive collection activity wears debtors down, but the date of filing seems tied more closely to ability to pay attorney fees and filing than collection activity.
In addition to interesting conclusions about the social cost of the current system of collections commonly employed in the U.S., this study provides valuable information about when your prospective clients are most likely to seek you out and what motivates them to look for help.
