Bankruptcy For Those Over 55 Years Old Has Increased In Recent Years
Is bankruptcy the right choice?
An Indiana Legal Studies research paper reports the rate of bankruptcies filed for those over the age of 55 has “skyrocketed” since 1991. According to data presented in the paper, Americans aged 55 to 64 are 66% more likely to file for bankruptcy now then they were in 1991. Those aged 65 to 74 were 204% more likely to seek relief through bankruptcy.
Overall, Americans filing for bankruptcy over the age of 65 make up approximately 12% of all bankruptcy filings. This is up from roughly 2% in 1991.
What has caused the jump in bankruptcy petitions for seniors?
According to the researchers, one reason for the increase is likely the lack of pension plans. Employers shifted from offering pension plans to an expectation workers manage their own retirement through use of 401(k)s and other retirement savings accounts. There was also a shift in the marketplace away from the use of unions. As a result, over the last 40 year, many employers laid off older workers. This led to an increase in the number of older workers who struggled to make ends meet and saw contributing to a 401(k) as an unattainable goal.
Another cause of financial strain: medical debt. A reported 6 out of 10 over the age of 65 who file for relief through bankruptcy site medical debt as the reason for the filing. Medical debt can quickly become unmanageable. The United States Centers for Medicare and Medicaid Services (CMS) reports the average cost of a 3-day hospital stay is $30,000 while care for cancer treatment can reach into the hundreds of thousands.
What options are available for relief from unmanageable debt?
One step that can help to manage this debt is to attempt to negotiate the price. A payment plan may also be an option. If these options still result in an unmanageable medical bill, bankruptcy may be an option.
If successful, a petition for relief through bankruptcy can wipe out medical debt. This can free up finances to cover other bills, like mortgage payments. Those who are considering bankruptcy may have concerns about the negative impact the filing could have on their credit score. It is important to note that this score can be rebuilt. Those who are granted relief through bankruptcy can work to build their credit score. Examples can include paying off bills on time and using a secured credit card to establish a history of meeting payments.
Is bankruptcy right for me?
Determining the right option depends on the details of each situation. Every situation is unique. An attorney experienced in these issues can review your situation and discuss the pros and cons of each option, better ensuring you have the information you need to make the decision that will best meet your needs.