In part one of our series about why the middle class is becoming more vulnerable to bankruptcy, we discussed the swelling numbers of Americans who have a college education and own homes filing bankruptcy. In part two of this series, we will explore how the massive numbers of job losses and rising unemployment rate is pushing more middle-class Americans into Chapter 7 and Chapter 13 bankruptcy .
Part II – Job Losses Become Permanent

Just one generation ago, the average middle-class American family could survive and thrive with only one spouse working. But in recent years, having one breadwinner in the family has not been enough to hold on to a middle-class lifestyle. Most Americans now depend on having both spouses working and even then the income they earn is just barely enough to maintain a home, cars and send the kids to private schools and college. This is why any hiccup in their lives could send them into financial crisis. Medical emergencies, a job loss, or even a reduction in salary could force them into a bankruptcy.

When the recession began in 2007 many middle-class workers were the first to be fired as companies struggled to shore up their balance sheets and avoid bankruptcy. Workers earning salaries as high as $250,000 –working in the housing or financial industry found that they were unable to find comparable work. As many as 53 percent of workers believed that they would be unable to find a job paying anything similar to what they were making at their old jobs. And they were right. Many formerly middle-class workers who did find jobs, found themselves working jobs that paid only a fraction of what they earned previously.

For them, their job loss was permanent, in that they are unable to return to their former earning levels in the present economy. And because both the housing and financial industry have experienced seismic changes, they may never be able to regain those former salaries. Many of these workers, knocked down a peg financially, are unable to maintain their mortgage payments, car payments, debt payments and other obligations and are forced to file bankruptcy. For these displaced middle-class workers, bankruptcy is the only legal remedy for their predicament. By filing bankruptcy they are able to discharge debt they would never be able to repay on their current salary and still have an opportunity to save for retirement and get a fresh financial start.