Bankrupt Children

Abstract

The missing players in bankruptcy are the families whose economic well-being will be tied to that of the filing debtor. They remain in the shadows in the legal and policy debates, while the focus remains almost exclusively on the acts of parties who file and how to adjust incentives to influence their behavior. If the families of those who file for bankruptcy are ignored, it is impossible to assess either the cause or the impact of a bankruptcy filing. Based on data from the 2001 Consumer Bankruptcy Project, this paper offers an analysis of the number of previously-uncounted children, spouses, ex-spouses, elderly relatives and others who are swept through the bankruptcy system with those who file formal petitions. The data indicate that families with minor children are at exceptional risk for bankruptcy, and that women rearing children alone are at even high risk. This paper suggests a promising new line of inquiry about the causes of economic collapse that focuses on the financial impact of child rearing.

Keywords: bankruptcy, bankruptcy law, family and children