Table 2: Family Debt Burden. Debt Service Payments as a
Percentage of Family Income
Income
1995
1998
2001
2004
Percentile
Less than 20
19.1
18.7
16.1
18.2
20–39.9
17.0
16.5
15.8
16.7
40–59.9
15.6
18.6
17.1
19.4
60–79.9
17.9
19.1
16.8
18.5
80–89.9
16.6
16.8
17.0
17.3
90–100
9.5
10.3
8.1
9.3
Source: Board of Governors of the Federal Reserve System, “Recent Changes in U.S.
Family Finances: Results from the 2001 and 2004 Survey of Consumer Finances,” Federal
Reserve Bulletin (2006), www.federalreserve.gov/pubs/bulletin/2006/financesurvey.pdf/.*
Table 3: Percentage of Indebted Families Whose Debt Service
Payments Are Above 40 Percent of Family Income
Income Percentile
1995
1998
2001
2004
Less than 20
27.5
29.9
29.3
27.0
20–39.9
18.0
18.3
16.6
18.6
40–59.9
9.9
15.8
12.3
13.7
60–79.9
7.7
9.8
6.5
7.1
80–89.9
4.7
3.5
3.5
2.4
90–100
2.3
2.8
2.0
1.8
Source: See note to table 2.
Soaring family debt burdens naturally pave the way to defaults and
bankruptcies. Personal bankruptcies during the first G. W. Bush admin-
istration totaled nearly five million, a record for any single term in the
White House. Due to the harsh bankruptcy legislation passed by
Congress in 2005 the number of bankruptcies has recently declined—at
least in the short term. But by making it more difficult for families to
free themselves from extreme debt burdens, this is certain to produce
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*In the Survey of Consumer Finances “family” has a meaning close to that of household
(encompassing even single individual households under the term “family”). Hence, the two
terms are used interchangeably in the present article. As stated in the Federal Reserve Bulletin
article presenting the results of the survey: “The definition of ‘family’ used throughout this
article differs from that typically used in other government studies. In the SCF, a household
unit is divided into a ‘primary economic unit’ (PEU)—the family—and everyone else in the
household. The PEU is intended to be the economically dominant single individual or coupl