An econometric household insolvency model was developed to explain the variation among states in nonbusiness bankruptcy rates. The model consisted of two equations with nonbusiness straight‐bankruptcy rates and Chapter XIII rates as the dependent variables. Higher divorce rates and percentages of a state's total credit offices which were finance companies were associated with higher nonbusiness straight‐bankruptcy rates. Higher percentages of a state's population between the ages of 25 and 34 and the existence of laws prohibiting wage garnishments were negatively related to nonbusiness straight‐bankruptcy rates.Higher percentages of Blacks, divorce rates, and credit offices per 100,000 population were associated with higher Chapter XIII rates. Also, the existence of Consumer Credit Counseling Services within a state's borders was associated with higher rates of Chapter XIII petitions. Finally, the existence of laws limiting wage garnishments was associated with lower Chapter XIII