Top 5 Bankruptcy Facts

Top 5 Bankruptcy Facts

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You can bet your bottom dollar these facts will be interesting – if you have one left, that is! Welcome to WatchMojo's Top 5Facts. In this installment, we're counting down the five most interesting facts about Bankruptcy.

#5: The Gender Balance Is Tipping

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Statistically speaking, women are more likely to file for bankruptcy than men – for the first time in modern history. It’s a battle of the sexes you’d probably rather not win, but according to statistics ladies, not dudes, are more likely to go broke in the twenty-first century, reportedly because of overspending and consumer debt. According to the Telegraph, which reports 2015 findings by the Insolvency Service covering England and Wales, women under the age of 25 are almost twice as likely to go bankrupt as young men. The divide exists in the US too, though it’s less harsh; Debt.org calculates that 52 women file for bankruptcy to every 48 men. On the other hand, a 2013 study at McMaster University concluded that companies performed better with women in the boardroom making financial decisions, citing a 2009 paper which found that firms cut the risk of bankruptcy by 20% by having at least one female director.

#4: It's Not Stupid to Go Bankrupt

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You might feel a little foolish if you ever go bankrupt, but there is no direct link between someone’s intellectual capabilities and their financial situation. Studies show that less intelligent people are as likely to succeed and be wealthy as clever people, and more intelligent folk are equally threatened by failure and financial difficulty. In a 2007 study conducted by Jay Zagorsky for Ohio State University, the link between the IQ and wealth levels of over 7,400 Americans was analysed. While results indicate that there is a correlation between IQ and income (the better your IQ, the higher your take home), the study found no link between intelligence and the likelihood of credit card problems, missed payments or bankruptcy. Zargorsky suggests that the findings show that smarter people struggle to save money. He points to the university parking lot as evidence; despite the supposed smartness of professors, “you see a lot of old, low-value vehicles,” he says. So, while it really isn’t rocket science to make money, it’s not difficult to lose it either!

#3: Health Problems Often Mean Money Problems in the U.S.

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Cancer survival rates are going up, which can only be a good thing! But, studies have shown that cancer survivors are considerably more likely to go bankrupt than people without the disease, due in large part to hospital costs. A 2013 survey led by Dr. Scott Ramsey matched the financial situations of almost 200,000 people affected by cancer with an equal amount who haven’t been. Results showed that 4,408 of those diagnosed had filed for bankruptcy, compared to 2,291 without a diagnosis. Furthermore, a 2010 poll by the Harvard School of Public Health and the Knowledge Networks organisation found that over a third of heart disease and diabetes sufferers linked their worsening financial situation to their poor health. The poll also found that 4% of those with heart disease and 9% of those with diabetes were forced to declarebankruptcy because of medical bills. The adage says that ‘you can’t put a price on your health’, but unfortunately, in America, you can – and some patients just can’t pay it!

#2: Saying Sorry Often Helps

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In a similar way to a number of other legal situations, an apology in the courtroom during a bankruptcy judgement is proven to increase the debtor’s chances of a more favourable ruling. According to a 2013 study conducted by the University of Illinois, the decision of a judge can often be influenced by a display of remorse. Jennifer K. Robbernnolt, a co-writer of the study, argues that bankruptcy cases are unlike any other in court “because the harm is often spread across many creditors, so there is no single victim,” and “the debtor initiates the case [which] may be perceived as acceptance of responsibility.” Essentially, although the debtor is looking to relinquish financial control, they do hold a small degree of control within the courtroom itself. As bankruptcy judges have to discern the likelihood of a debtor honouring a proposed payment plan, saying sorry can help build a better, more commendable personal profile. “Our findings suggest that bankruptcy is, at least in part, about forgiveness,” says Robbernnolt, “while the law still matters… judges decisions can be complex and multidimensional.”

#1: It Happens to the Best of Us

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Bankruptcy can be billed as a very lonely state of affairs, but it’s more common than most of us probably believe. About one in every 70 American households has filed for insolvency, or will do so in the future, and studies show that over 40% of American families spend more than they earn every year. Although the global economy has improved since the financial crisis of 2008, as long as tendencies to overspend continue, bankruptcy will threaten, largely without prejudice. Even the rich and famous aren’t immune. Talk show host Larry King, legendary animator Walt Disney, former heavyweight champion Mike Tyson and ‘90s rapper MC Hammer have all filed for bankruptcy at some point in their careers. Even the iconic former president Abraham Lincoln had his assets taken from him during an early career as a shopkeeper – and he now appears on the penny! If that doesn’t give you hope, then nothing will.     So, what do you think? Is it absolutely ridiculous, or kind of understandable that the rich and famous sometimes go broke? For more cash-strapped Top 10s and apologetic Top 5s, be sure to subscribe to WatchMojo.com.