Bankruptcies among seniors is growing rapidly. In 1991, bankruptcy filings for those 65 and older made up 2% of all claims while today senior bankruptcies are at 12%.
A recent research paper by Indiana Legal Studies says safety nets for older Americans have shrunk over the past two decades due to risks associated with aging, reduced income and increased health care costs.
Reasons why seniors file for bankruptcy
Forbes magazine reports many factors are to blame for the rise in financial distress for older people, including:
- Erosion of wages and pension plans: As the influence of trade unions has weakened, pay has stagnated for many workers while uncertain 401(k) plans replace defined pensions.
- Rise in medical costs: Rising health care expenses affect everyone, but senior care is more expensive, and Medicare pays a smaller share of expenses than it used to. Adding to that is a longer life expectancy.
- Aging baby boomers: An in-depth analysis by the Financial Times in London blames baby boomers in part, for allowing themselves to get deeper in debt compared to their parents who grew up during the Depression.
- Predatory practices: The study says banks and other lenders offer low-interest credit cards to seniors, even those filing for bankruptcy. The Federal Reserve’s Survey of Consumer Finances shows 60% of seniors had debt in 2016, with 29% owing money for a mortgage or other housing debt. That is a 50% increase over the past 25 years.
- Avoiding harassment: Creditors are not allowed to garnish Social Security benefits and the Times’ analysis says some seniors may not need to file for bankruptcy but do so to get creditors to stop harassing them.
Seek legal help to deal with massive debt
Bankruptcy is a complicated legal process which may seem overwhelming. However, an experienced bankruptcy attorney here in Georgia will work to provide the best options for eliminating your debt, ending harassment, protecting your rights and reducing stress for everyone involved.