Huge Leap in Bankruptcy among Women

An interesting article by Rachel Shields discusses statistics that reveal that women are increasingly struggling to meet their financial obligations. While the figures from different agencies show that the number of female bankruptcies increased from 6,042 in 2000 to 29,680 (42 percent of all bankruptcies) in 2009, the number of women entering into Individual Voluntary Agreements increased by 22 percent in 2009 and 63 percent of Debt Relief Orders were awarded to women in the same year, there is hardly any consensus on the explanation of the cause. Graham Horne, deputy chief executive of the Insolvency Service attributes the increases to “irresponsible spending” in a bid to maintain an unsustainable lifestyle. Nigel Millar, a business recovery partner with Baker Tilly LLP believes that because more women have greater control over their finances more women will logically get more credit and incur the consequences. However, research carried out by the Equal Opportunities Commission found that women earn less, own less, and have a lower earning potential. Thus, Anna Bird, head of policy and campaigns at the Fawcett Society argues that women who lose their jobs are less likely than men to have savings.

The Consumer Credit Counselling Service on its part ascribes the increase to rising unemployment given that women are twice as likely as men to work in vulnerable sectors (such the public sector) and departments. Other social factors such as the increase in single-person households (9 out of 10 are run by women) and divorce rates (a study by the Institute for Social and Economic Research revealed that while men’s income increased by 25 percent five years after divorce, that of women fell by 20 percent) have also been advanced as proximate causes.

What this article demonstrates is that the huge leap in bankruptcy among women may be explained by several factors, some of which are related to gender and some of which are not. While financial mismanagement and unemployment (not specifically affecting sectors populated by women) show that to speak in generalities may be incurious, social factors such as earning capacity and the effects of divorce and increase in single-person households show that it is not always a matter of the circumstances of each case and it remains very important to make gender distinctions in analyses.

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