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Overspending biggest culprit in bankruptcy cases
STORY TOOLS 
More from BusinessOverspending has become the leading source of personal bankruptcies in recent years, according to a recent study from the University of California, Davis, Graduate School of Management.
Previously, illness and unemployment were the primary reasons, said Ning Zhu, an associate professor of management and author of the study.
The American Bankruptcy Institute reported more than 2 million bankruptcy filings nationally in 2005.
Zhu said debt caused half of all recent bankruptcies, while unemployment caused 13 percent of filings. Medical problems accounted for 5 percent.
He said bankrupt households have bigger mortgages and higher car loans and credit card balances than households that keep their finances in the black. At the same time, bankrupt households earn half as much money as those that remain solvent.
The research paper recommends bankruptcy law reform to prevent people from intentionally using bankruptcy to deal with excessive debts.
(Distributed by Scripps Howard News Service, www.scrippsnews.com.)
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