Bankruptcy can offer you a fresh start when faced with overwhelming debt, and it’s a step that many older Americans are choosing more often.
The number of people over 55 years of age filing for bankruptcy has surged over the past 30 years, and 78% of those who have filed earned less than the median average income.
University study reveals startling numbers
A research paper funded by the University of Illinois details troubling results:
- Bankruptcies declared by Americans age 55 to 64 rose 66% from 1991 to 2016
- Bankruptcies declared by Americans age 65 to 74 surged 204% from 1991 to 2016
- 12% of those filing for bankruptcy are 65 and older, compared to 2% in 1991
What are the causes?
There are many different economic reasons cited for the surge in senior bankruptcies, including:
- Medical debt: Six out of 10 seniors who file for bankruptcy say they cannot afford to pay their medical bills. Rising health care costs and decreasing insurance coverage are key factors, along with increasing life expectancy rates.
- Inadequate retirement: The weakening of defined benefit plans, such as pensions in favor of less certain and riskier IRAs and 401(k) plans mean seniors have less coming in after they retire. Many have only Social Security and their savings accounts to survive.
- College loan debt: Forbes says student loan debt has increased by 71% over the last five years for seniors. Many baby boomers accrue debt by going back to school at a later age or by co-signing student loans for children and grandchildren who then default.
- Credit debt: More seniors without financial means are racking up massive amounts of debt through low-interest credit cards after being targeted by banks and other lending institutions. In 2016, 60% of senior households had significant credit debt.
Seek knowledgeable bankruptcy advice
While most people think of bankruptcy only as a last resort, it is an effective way to deal with overwhelming debt and is the first step to restoring their financial freedom. An experienced and compassionate bankruptcy attorney here in Alabama can answer all your questions about the process and whether it’s the right option for you.