AbstractThis paper utilizes the population of personal bankruptcy filers in the state of Delaware during 2003 and finds that household expenditures on durable consumption goods, such as houses and automobiles, contribute significantly to personal bankruptcy filings. Medical conditions also lead to personal bankruptcy filings, but other adverse events, such as divorce and unemployment, have marginal effects. My findings suggest that consumption patterns make households financially overstretched and more susceptible to adverse events, and these results reconcile the strategic filing and adverse event explanations for the increase in bankruptcy filings.