Visa U.S.A. will release a study today showing that change in income-and not increased use of credit cards-is the primary reason for the dramatic rise in personal bankruptcies.

The study of 11,000 bankruptcy petitions filed in Massachusetts, California, Tennessee, and Illinois over the past few years showed credit card balances constituted less than 5% of the debt held by Chapter 13 filers and between 7.3% and 15.6% of the debt held by Chapter 7 filers.

The study concluded that change in income, especially for Chapter 7 filers, was a more significant factor in the rise in bankruptcy filings, which hit a record 1.1 million last year.

For example, the study found that income earned by Chapter 7 filers fell on average by between $3,000 and $13,000 in the year prior to filing. More than half of Chapter 13 filers saw their incomes drop, although the authors did not calculate the average change. Chapter 13 filers substantially outspent their earnings, devoting about half their income to housing expenses alone.

"The single most important factor affecting an individual's decision to file for bankruptcy appears to be a decline in income, coupled with an inability to adjust lifestyles to accommodate the reduced level of income," the study concluded.

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