More Americans Considering Bankruptcy as Middle Class Shrinks

Bankruptcy is becoming an option available to more and more people as the middle class shrinks in the U.S. The middle class is now outnumbered by the poorest and the richest groups in America, according to a report that was recently issued by the Pew Research Center. This represents a massive shift from previous decades when the middle class represented a majority of American households.

The parameters of the study included a definition of a middle-class household as one with income within a range of two-thirds to double the income of the overall median household income. For example, a family of three qualifies as middle income if they earn slightly less than $42,000 annually.

The Pew researchers found that there are currently 51 million upper-income adults and 70 million lower-income adults in the U.S., for a total of 121 million people who fall on either extreme end of the economic spectrum. By comparison, there are just 120 million adults who make up middle-income households. That may not seem like a big difference, but it is shocking when one realizes that middle-income families are no longer a majority in the U.S. The Pew Report indicates that more than 60 percent of U.S. households were middle-income households at the beginning of the 1970s; that figure is now below 50 percent.

Part of the reason for the shrinking middle class, and the rising lower class, is that income gains for these groups have been smaller than the income gains for the upper class. The Pew Report data shows that the poorest U.S. households have seen pay increases of just 28 percent since 1970, in contrast to a nearly 50-percent increase in income for upper-class households over the same time period.

The downward trend in middle-income households, as well as the rise in low-income households, is particularly alarming to voters who are looking for reasons to back certain candidates in the upcoming Presidential election. As a result, many of the candidates are placing an emphasis on income inequality and targeting middle-class voters as they campaign ahead of the primaries.

Surely at least some of these candidates are aware of the importance of the middle class not just to their electoral aspirations but also to the U.S. economy. In fact, the Pew researchers who compiled the data and wrote the recent report noted that “a larger middle class” is vital to providing an “economic boost” in most advanced economies.
The recent recession is no doubt responsible for a lot of the disturbing economic changes documented in the Pew Report. With more and more Americans facing unmanageable debt, bankruptcy has become a viable option for a lot of people who are looking to get back on the right financial path.

For additional information about the evolving middle class in the U.S., read the article entitled, “Here’s How Much the U.S. Middle Class Has Changed in 45 Years.”

If you find yourself in over your head with debt or other financial obligations, Joel R. Spivack is an experienced debt attorney who can help you. Mr. Spivack can advise you on the ways to get back on track. He has more than 30 years of experience assisting South Jersey residents with bankruptcy and other debt management options. Speak to Mr. Spivack today to learn more about your options.

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Attorney Joel R. Spivack is an experienced bankruptcy and residential real estate transactions lawyer in Cherry Hill, New Jersey. Clients come to us for legal services, but what we really provide is peace of mind. For more than 30 years, Attorney Spivack has helped people make wise, informed decisions about bankruptcy filings, debt relief options and residential real estate transactions.
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