Financial Education for Bankrupt Families


Thorne, D. & Porter, K. (2007) Financial education for bankrupt families: Attitudes and needs. Journal of Consumer Education 24, 15-27.

Brief Description: The study examines bankrupt families’ attitudes toward financial education courses and the expenses with which they are most likely to struggle after bankruptcy. Results reveal that a majority of respondents believed that a money or debt management course would have helped them avoid bankruptcy. However, respondents with college degrees, who were white, or who were older (especially 65 and over) were less likely to report that a financial education course would have benefited them. Results also reveal that the expenses with which bankrupt households are most likely to struggle after bankruptcy are healthcare-related and housing-related, both of which are quite difficult to reduce. Therefore, even with financial education courses, improving financial stability after bankruptcy may prove difficult.

Implications: As a result of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), it is mandatory that debtors complete a financial education course before their bankruptcies are discharged. The assumption driving this component of the legislation is that financial education courses will teach consumers how to avoid debt. Our findings may help practitioners who teach financial education courses tailor their educational materials to increase receptivity and applicability. For example, practitioners may find that select populations will be more receptive to the courses — minorities, less educated individuals, and younger debtors. Further, using our findings, they will be able to arm clients with the knowledge that the bills with which they are most likely to struggle after bankruptcy are those most difficult to reduce: expenses associated with housing and healthcare.