wealthschema/archetypes/s-02-bankruptcy-recovery
S-02Special SituationsFormationlow tax complexity

Bankruptcy Recovery

Individual recovering from Chapter 7 or 13 bankruptcy, rebuilding credit, limited access to financial products.

S-02 models the household one to seven years past a Chapter 7 discharge or inside a Chapter 13 plan: rebuilding credit, locked out of conventional credit products, and operating on a thin file with a public-record flag that lenders and identity-verification systems must handle without tripping fair-lending rules.

Age Range
28–50
Net Worth
$0–$100k
Cohort
Special Situations

About this archetype

S-02 exists because the post-bankruptcy household exposes a specific blind spot in financial software: the file is technically a consumer, often with income comparable to mass-market peers, but conventional underwriting models reject them on the BK flag rather than on cash-flow reality. A Chapter 7 stays on the credit report for ten years; Chapter 13, for seven. During that window the household is locked out of most prime credit cards, conventional mortgages, and many brokerage margin accounts, but they can hold deposit accounts, secured cards, FHA loans (after a two-year wait post-Chapter 7, one year inside an on-time Chapter 13 plan), and IRAs. Fair-lending compliance teams need realistic test data here because ECOA and Reg B prohibit denial purely on bankruptcy status once the discharge is complete — the underwriting must look at current cash flow, not the public record.

The cash-flow profile is mass-market: median gross income of $61,223, p25–p75 spanning roughly $55k–$69k. Net worth median of $182k is higher than naive intuition suggests because the corpus models households that have rebuilt — typically with retained 401(k) balances (ERISA-protected through Chapter 7), a homestead within the state exemption, and roughly $54k in liquid assets. Credit-card balances are present on every record (the secured or rebuilder card that re-anchors the credit file), 12 of 18 carry auto loans (often subprime), and 10 of 18 hold mortgages — disproportionately FHA or non-QM.

What distinguishes S-02 from neighbouring underserved archetypes is the public-record flag, not the wealth tier. U-01 (unbanked) and U-02 (low-income working) share the same income band but never had access to mainstream credit; S-02 had access, lost it, and is clawing it back. That distinction matters for any product testing the 'second-chance' segment — credit-union starter loans, fintech credit-builder products, ITIN-or-thin-file alternatives. The household knows what a 401(k) is, has used a mortgage before, and is not financially illiterate; the friction is structural exclusion, not unfamiliarity.

Defining characteristics

  • Post-bankruptcy public-record flag
    Every corpus household carries a Chapter 7 or 13 record visible on the credit report for 7–10 years, which automatically downgrades scoring-model outputs even when post-discharge cash flow is healthy.
  • Credit rebuilding
    All 18 households carry credit-card balances, typically on secured or rebuilder products with sub-prime APRs and low limits ($300–$2,000).
  • Limited product access
    Conventional mortgages and prime cards are unavailable for 2–4 years post-discharge; FHA loans appear on 10 of 18 households after the FHA waiting period (2 years Chapter 7, 1 year on-time Chapter 13).
  • Retained retirement assets
    ERISA-qualified 401(k) and IRA balances are exempt from the bankruptcy estate up to high limits, so the corpus shows preserved retirement savings even where unsecured debt was discharged.
  • Financial fresh start
    Investable assets median of $72,616 and net-worth median of $182,130 reflect households 2–5 years post-discharge that have rebuilt cash savings, not those at the moment of filing.
  • Mass-market income
    Combined gross income median of $61,223 sits firmly in the mass-market band — bankruptcy is not a low-income-only event, and the corpus reflects working-class to lower-middle-class earners.

Corpus signature

n = 18 households

Aggregated across the 18 S-02 households in the shipped v3 corpus corpus. Numbers describe the corpus, not population claims.

Median income
$61k
p25–p75 $55k–$69k
Median net worth
$182k
mean $210k
Liquid net worth
$54k
median
Investable assets
$73k
median
Income distribution
$40k–55k
5
$55k–70k
8
$70k–90k
5
Net-worth distribution
$20k–170k
9
$170k–320k
4
$320k–475k
5
Goals across the corpus
Retirement18 / 18
Education funding8 / 18
Home purchase8 / 18
Emergency fund5 / 18
Debt payoff5 / 18
Liability composition
Credit cards18 / 18
Auto loans12 / 18
Mortgages10 / 18
Student loans5 / 18
  • 10 of 18 (56%) are homeowners; the remainder rent.
  • NC, VA, CA account for 4 of 18 households — 22% of the corpus.
  • Median adult-member age is 42 (range 29–52 across primaries and spouses).
  • 8 of 18 (44%) carry one or more dependents.

Representative household

S-02-seed-11
Tyler D.Single·Charlotte-Concord-Gastonia, NC

Tyler is the textbook S-02 stress profile: $63k income, only $45k liquid, but $250k of total liabilities riding against a $219k net worth — almost entirely a reaffirmed mortgage plus auto. He is on track for the small emergency-fund target but materially behind on retirement. This is the household that exposes whether an underwriting model can distinguish 'rebuilt and stable' from 'still distressed' on the same public-record flag.

Gross income
$62,583
Net worth
$218,547
Liquid NW
$45,429
Age
38
Top goals on this household
Retirement
$1,198,800
Emergency fund
$23,976

Schema fields covered

Every S-02 household ships with — at minimum — these JSON fields populated. The full schema is documented in the data set you purchase.

members[].age
income.combined_gross
net_worth.total
filing_status
longitudinal.monthly[].net_cash_flow
longitudinal.monthly[].savings_rate
stress.scenarios[]
liquidity.months_of_expenses

Who builds against this archetype

S-02 is the canonical test corpus for second-chance lending. Three buyer profiles draw on it most. Fair-lending compliance teams at CDFIs and community banks use it to validate that automated underwriting models do not produce ECOA-prohibited disparate-treatment outputs on post-discharge applicants. Credit-builder fintechs (secured-card issuers, rent-reporting products, credit-builder loan platforms) use it to populate origination flows and credit-bureau update simulations. Mortgage-tech teams use it for FHA, VA, and non-QM underwriting QA where the BK waiting period and the seasoning of rebuilt credit are the decisive eligibility variables. Tax-software teams also touch the corpus for Form 982 (cancellation-of-debt-income exclusion) test cases.

Testing scenarios this corpus is calibrated for

  • 01Fair-lending model testing: validate that an automated underwriting decision engine does not deny purely on bankruptcy flag where post-discharge DTI and cash flow meet program guidelines.
  • 02FHA waiting-period eligibility logic: test the 2-year-post-Chapter-7 and 1-year-into-Chapter-13 boundary cases with corpus-realistic income and reserves.
  • 03Credit-builder loan origination flows for households with $50k–$80k income and a public-record flag — the exact segment that secured products are priced for.
  • 04Form 982 cancellation-of-debt-income exclusion testing where discharged debt would otherwise generate phantom 1099-C income.
  • 05Reaffirmation-agreement edge cases: auto loans and mortgages reaffirmed during bankruptcy proceedings behave differently than discharged debt post-emergence.
  • 06Reg B adverse-action notice generation where the denial reason must be specific and lawful — the BK-flag-as-decision-driver scenario is a high-risk compliance surface.

Edge cases and what's not in this corpus

S-02 is calibrated as the post-discharge or in-Chapter-13-plan state, not the pre-filing distress state. Households actively defaulting on mortgages, contemplating filing, or in the 341 meeting window are not modeled here — those map better to MB-02 (distressed mortgage) or B-01 (financial avoidance) with a stress overlay. Business bankruptcies (Chapter 11, Subchapter V) are excluded entirely; small-business owners working through restructuring belong in SB-01 or SB-03 with an event flag. Medical-debt-driven bankruptcies, while common in the real-world distribution, are split off into S-03 to keep the testing surfaces separate. Finally, repeat filers (Chapter 13 hardship-conversion-to-7, serial filings) are not represented; the corpus models the first-and-only filing as the cleaner test case.

Calibration notes

Income bands and the homeownership rate were anchored during v3 synthesis to American Bankruptcy Institute filer demographics and BLS consumer-expenditure data on post-discharge households. The net-worth distribution reflects the well-documented post-bankruptcy recovery curve — preserved ERISA assets plus state homestead exemptions produce higher net worth than the income alone would suggest. Per CLAUDE.md §9, the v3 corpus is frozen and not regenerable; calibration descriptions reflect synthesis intent, not auditable distribution-fit statistics. Buyers should treat the corpus as plausibility-anchored, not regulatorily certified.

How this differs from related archetypes

Frequently asked questions

What does the S-02 archetype represent?+

S-02 — Bankruptcy Recovery represents the household one to seven years after a Chapter 7 discharge or inside a Chapter 13 plan. The corpus models the rebuild phase: secured credit cards, FHA or non-QM mortgage eligibility, preserved retirement assets, and the public-record flag that affects underwriting outputs.

Why is net worth so high if these are post-bankruptcy households?+

ERISA-qualified retirement assets are exempt from the bankruptcy estate (with very high limits), and state homestead exemptions protect substantial home equity. The corpus models households 2–5 years post-discharge that have rebuilt liquid savings on top of those preserved assets — not households at the moment of filing.

Does the corpus distinguish Chapter 7 from Chapter 13?+

Implicitly, via the credit-product mix and the time-since-discharge that the structural notes imply. The corpus does not encode the chapter as a discrete field; buyers needing that as a tested variable should treat the chapter type as an overlay during their own labelling pass.

Are business bankruptcies (Chapter 11, Sub V) in S-02?+

No. S-02 is consumer-bankruptcy only. Small-business restructuring belongs in SB-01 or SB-03 with a transition flag, not here.

Which synthetic wealth data sets include S-02 households?+

S-02 is tagged for six bundles — B04, B14, B23, B27, B29, and B30 — covering cash-flow stress, behavioral finance, fair-lending compliance, life-event coverage, underserved/CDFI fit, and transitional household coverage.

Is the S-02 corpus regenerable?+

No. The shipped v3 corpus is frozen and not regenerable from current code (CLAUDE.md §9). Sampler improvements land in a future v4 release with per-archetype golden fixtures in CI to prevent silent drift.

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