Religion and Bankruptcy

What impact does religion have on personal bankruptcy filings? That is the question asked by Zeke Johnson and James Wright in a recent Suffolk University Law Review article.*


Their article reports on survey research that they conducted among Utah bankruptcy filers. The survey results were then matched with case files to provide additional data, and the results were then compared with the 2001 Consumer Bankruptcy Project. They conclude:

Households in the state of Utah filed for bankruptcy at a rate of 24 per 1000 in 2004, which is approximately twice the national rate. The most easily accessible, and most often cited reasons for this revolve around demographic or behavioral aspects linked to the state’s predominant religion: Mormonism. The data gathered in the Utah Bankruptcy Project strongly suggests that any attribution of the high bankruptcy rate in Utah to Mormon traits is misplaced and lacks explanatory power. Mormons appear slightly underrepresented among those filing for bankruptcy. In addition, demographic characteristics linked to Mormons, such as the high number of children, the young age of homeowners, and the payment of tithing do not appear to account for the state’s bankruptcy problem. While Mormons appear to fare slightly better in Utah than their peers, and likely do not cause the bankruptcy problem, they are also suffering financially more than their national peers. (pg. 628-629)

I have some questions about the methodology used in this study, as well as the way in which the authors analyzed their data. I am also somewhat skeptical of their ultimate explanation, which is economic hardship. The problem with this is that it doesn’t explain Utah’s high filing rate, unless one can somehow demonstrate unique economic hardship in Utah. For example, Utah’s filing rate may be determined the unique structure of Utah’s non-bankruptcy law. What are homestead exemptions or collections law like in Utah? Still, the study does seem to have the virtue of being the first study of Utah bankruptcy that actually collected information about religious affiliation and practice.

*See Ezekiel Johnson & James Wright, Are Mormons Bankrupting Utah? Evidence from the Bankruptcy Courts,40 Suffolk U. L. Rev. 607 (2007) (westlaw access required)

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5 Responses

  1. Frank says:

    I find this a fascinating area of law–particularly on the question of whether someone can continue tithing into bankruptcy.

    Compare, for example:

    Jool Nie Kang, TITHING: A FRAUDULENT TRANSFER OR A MORAL OBLIGATION? 18 Bankr. Dev. J. 399

    and

    Richard Corbi, YOU HAVE THE RIGHT TO CABLE TV, BUT NOT EDUCATION: A PROPOSAL TO AMEND THE BANKRUPTCY CODE TO PERMIT ALL EDUCATION EXPENSES IN CHAPTER 13 BANKRUPTCY PLANS, 43 Fam. Ct. Rev. 625 (2005)

  2. Nate Oman says:

    I don’t think that the issue is whether one can pay tithing in bankruptcy. Rather, I think it is whether or not a bankruptcy may void a pre-bankruptcy transfer to a religious entity. I am torn on this issue. On one hand, I am not particularlly sympathetic to the claim that insolvent debtors ought to be able to give their assets to a church thus depriving their creditors of payment. On the other hand, I can understand the concerns of churches (particularlly small, congregationally based churches) that run the risk of getting sucked into expensive litigation over the scope of a trustee’s right to pre-petition payments.

  3. Xanthippas says:

    Unless a study controls for all of the various factors that can influence bankruptcy filings, I’m not sure how much use it is other than as anecdote.

  4. Brian says:

    Listed below are some possible reasons for the high rate of bankruptcy in Utah but my observations from living in Utah for three years:

    *great percentage of self employed people and people working for small businesses

    *greater percentage of MLMs (multi-level marketing schemees)

    *lack of large private employers and Fortunes 500 companies based in Utah

  5. john d says:

    Listed below are some possible reasons for the high rate of bankruptcy in Utah but my observations from living in Utah for three years:The most easily accessible, and most often cited reasons for this revolve around demographic or behavioral aspects linked to the state’s predominant religion: Mormonism but i think the major reason is that most of the people are self employed lack of large private employers and Fortunes 500 companies based in Utah.