Bankruptcy Spikes Among Gen X and Millennials: Alarming Debt Crisis on the Horizon

By: Ben Campbell | Published: Feb 01, 2024

A shocking increase in Millennials and Gen Xers seeking bankruptcy advice has been witnessed across the United States.

The trend seems to signify that the age groups are entering a debt crisis, just as the U.S. economic situation appears to be improving.

Bankruptcies Surge for Younger Generations

Legal experts from Newsweek were the first to break the news of the recent surge of Millennials and Gen Xers seeking bankruptcy advice.

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This comes shortly after the release of a favorable report, which suggested that consumer confidence saw a 29% increase when compared to last November.

Bankruptcy Help Reaches Three-Year High

LegalShield’s December Consumer Stress Legal Index provides evidence to suggest that Americans are battling against severe financial stress.

A young man dressed in a blue suit jacket is visibly stressed

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The data, sourced from millions of legal service requests, suggests that consumers requesting legal assistance and advice on bankruptcy has hit a three-year high.

Financial Challenges Affecting Younger Generations

Economists surmise the financial challenges appear to be greatly affecting the younger generations.

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Some experts have even gone as far as to claim a credit reckoning could be forthcoming for those most affected. 

Debt on the Rise Across the U.S.

LegalShield’s data reflects a trend widely acknowledged by economists across the state.

A family clearly visibly stressed due to financial trouble as they sit at a table in their home

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Debt in the average American household has increased by around 1.3% in last year’s third quarter, reaching a staggering $17.29 trillion. 

Debt Hitting Various Demographics

The increase in debt, attributed to auto loans, credit card bills, student loans, and mortgage payments, appears to have hit all generations across the states. 

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With the new financial stress, LegalShield claims people are reaching out for advice on how to deal with bankruptcy. 


Legal Shield Notice Increase in Gen Xers and Millennials Seeking Bankruptcy Advice

LegalShield’s data points to a startling increase in Gen Xers and Millennials seeking legal advice centered on bankruptcy. 

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According to their figures, Gen Xers seeking assistance has seen an increase of 24.7% in recent years. Meanwhile, Millennials seeking bankruptcy advice have shot up by 40.1%. 


LegalShield SVP Speaks on Situation

Matt Layton, LegalShield’s SVP of Consumer Analytics, claims Gen Xers and Millennials have reached out for legal advice as they’re experiencing severe financial problems.

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“People don’t call attorneys unless they are genuinely worried about something,” Layton said in a statement shared with Newsweek via email. 


Real People with Real Problems

Layton went on to allude to the fact that many Americans aged 27 to 59 are under severe financial stress. 

A man sits with his hands on his heads as he looks over at his family’s financial situation and debt payments

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“This is not a survey with leading questions or prompts about the economy; these are real concerns from real people who sought out affordable legal advice to take action,” he said


Concerning the Rise in American Debt Struggles

Warren Schlichting, CEO of LegalShield, also spoke on the situation.

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While experts recently reported positive signs for the U.S. economy, LegalShield’s data, unfortunately, shows a “concerning rise in consumer debt struggles—from bankruptcies to car repossessions,” according to Schlichting.


Analytics Expert Says Debt May Rise Further

When speaking with Newsweek, Layton argues that U.S. household debt may see an even sharper rise in the coming months.

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“The rise in consumer stress in contrast to increased spending may point to an even sharper rise in household debt in the coming months,” he said.


Gen Zers and Millennials Feeling the Bite

Experts surmise the Federal Reserve’s recent rate hike may further negatively affect Gen Zers and Millennials across the nation. 

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Those who were already under financial stress will undoubtedly feel the bite and may be forced to seek legal advice from LegalShield.