By Lewis Loflin
Published: January 1, 2019
Update, 2019: In 2018, Tennessee ranked second in the nation for bankruptcy filings per capita, behind Alabama, according to Jennifer Thomas at HelloResolve. Alabama had the highest rate, influenced by a median household income of $48,123, while Tennessee’s was $51,340, both below the national average of $61,372 at the time. Tennessee’s Chapter 13 filings, which allow for debt restructuring, accounted for 59% of its bankruptcies, reflecting a preference for repayment plans. [Web ID: 1]
Update, 2024: Tennessee continues to rank second in bankruptcy filings per capita, with 5.36 filings per 1,000 people in 2023, behind Alabama at 5.72, according to the American Bankruptcy Institute. Total filings in Tennessee decreased slightly to 38,021 from 42,893 in 2019, mirroring a national trend of declining filings post-COVID-19 stimulus. Chapter 13 filings remained significant at 54%, still second to Louisiana’s 58%. Tennessee’s median household income rose to $64,035 by 2023, showing progress, though it remains below the national average of $74,580. The state has focused on financial education and workforce development to support residents, including programs to align community college training with workplace needs. [Web ID: 10, 12]
Tennessee has historically ranked high in bankruptcy filings, prompting ongoing efforts to support its residents. In 2003, Tennessee led the nation with 1,078 bankruptcy cases per 100,000 people, as reported by the Kingsport Times-News. By 2006, the state had 1.099 filings per 1,000 people, maintaining its top ranking. In 2008, The Tennessean noted Tennessee’s rate at 6.92 filings per 1,000 people, with a total of 42,893 filings, an 18.6% increase from 2007. The Tri-Cities region saw a 30.8% increase that year. Tennesseans repaid about $160 million to creditors through Chapter 13 plans, contributing to the $6 billion paid annually nationwide. [Web ID: 1]
In 2008, the Associated Press highlighted economic challenges, noting Tennessee’s per capita income growth was among the lowest nationally. However, the state has since made strides in addressing these issues through education and economic development initiatives, aiming to improve financial stability for its residents.
Judge Marcia Parsons, a bankruptcy judge for the Northeast District of Tennessee, has emphasized the importance of financial education in reducing bankruptcy filings. In 2003, she noted, “There needs to be more education, explaining in high schools and colleges the cost of credit, the dangers of credit cards, and what the true cost of credit really is.” Parsons, who saw a 23% increase in cases over her decade-long tenure, advised individuals to manage credit responsibly, especially young couples balancing home, car, and family expenses. She also highlighted the risks of credit card solicitation on college campuses, encouraging better financial literacy to help Tennesseans thrive. [Web ID: 1]
Tennessee Gov. Phil Bredesen, in addressing workforce challenges, emphasized aligning education with workplace needs:
I’m interested in exploring any kind of joint effort where a community college can help train people in exchange for some honest attempts on your part to employ them when they’re done.
These initiatives reflect Tennessee’s commitment to supporting its workforce and fostering economic stability. For more on workforce development, see Tennessee’s Economic and Education Alignment Efforts.
Tennessee’s high bankruptcy rates have highlighted the need for continued support for its residents. Through financial education, workforce training, and economic development programs, the state is working to empower individuals and families to achieve greater financial stability. These efforts aim to build a stronger economic future for all Tennesseans, reflecting the state’s resilience and dedication to community growth.
