Revisiting How Many People Have Filed Bankruptcy

Belisa Pang has an important new paper out about repeat filers, "The Bankruptcy Revolving Door."  Using new techniques and as well as a database of credit reports, she estimates the percentage of bankruptcy filers who are repeat filers is 36%. In 2023, she estimates the figure was 46%. The paper also explores the reasons for repeat filings. It should be required reading for anyone in the consumer bankruptcy space.

Pang's estimate is much higher than the official statistic from the bankruptcy court records which ask filers to disclose repeat filings in the last eight years. According to the FJC database, 19% of filers since 2014 have checked the box that they filed bankruptcy in the last eight years. For the research data from the Consumer Bankruptcy Project, we collects the date of the last filing. Despite the official language asking about bankruptcy in the last eight years, 16% of those who report a repeat filing are reporting a prior case from more than eight years ago. Thus, I wondered how many prior bankruptcies are actually going unreported. I spot-checked some of our own research data. Using Pang's methodology, I found it was pretty easy to locate cases that do not disclose a repeat filing on the bankruptcy forms, but the court's computer system (PACER) has flagged as a repeat filing. 

Pang's paper caused me to revisit my estimate of how many living Americans have filed bankruptcy. When I did the calculations, I came up with a conservative estimate of 1 in 10. The precise number was 11.1% but because of the heroic assumptions I was making, especially with the repeat filing rate, I called it 1 in 10 to be conservative. In my calculation, I used an assumption, based on the then-current FJC records, that 15.2% of filers are repeat filers. Pang's much higher figure means my estimate is a bit too high. If I plug 36% into the numbers I used then, I come up with 9% of the public having filed bankruptcy. If the repeat filing rate is 46%, the percentage drops to 8% percent. So, it is maybe in 1 in 11 or 1 in 12. That is still not a small number.