Over 65 and broke: Don’t feel guilty. “The number of bankrupt older Americans has surged in recent years, a sign of widespread financial distress and a shrinking social safety net”, according to a research study recently released. In the study of bankruptcy filers it found using data, from the Consumer Bankruptcy Project, more than a two-fold increase in the rate at which older Americans (age 65 and over) file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system. Further the study the study went on to say that older Americans now turn to what little is left of the social safety net — bankruptcy court.
In a recent article on money and finance by AARP they report: “Many people are not prepared to finance 30 years of retirement,” said Lori A. Trawinski, director of Banking and Finance at AARP’s Public Policy Institute. “It is not surprising to see an increase in bankruptcy filings by older individuals.” Plus, Trawinski said: “The percentage of older Americans carrying debt into retirement has increased over the past three decades. The amount of debt has also increased, largely as a result of mounting amounts of mortgage debt. Credit card balances have also increased for older families. Since many families live on a fixed income during their retirement years, the debt burden often becomes unmanageable. Increasing costs for medical care and housing, and unexpected events, such as death of a spouse, often stretch already tight budgets.”
Over the past decade I have found this to be true in my own practice. Those individuals over 65 seeking information and help about bankruptcy has dramatically increased. Many seniors are dealing with fixed incomes and fixed resources, so when there is a financial problem, even a minor problem, then sometimes the only option is to file for bankruptcy protection. Many individuals over 65 also face large medical issues and related expenses. In fact medical debt is the number one source of personal bankruptcy filings in the United States and people 65 and older now make up roughly 9% of bankruptcy filers, up from 7% in 2008.
Another pressing issue that many older clients tell me about is aggressive debt collectors. Many seniors turn to bankruptcy to find protection from the constant bombardment of threatening phone calls of debt collectors demanding repayment of debts they just cant afford to pay. A recent report from the federal Consumer Financial Protection Bureau found that debt collection was the most-complained about product or service for consumers over age 62.
I know there is much stigma around bankruptcy for many reasons. Many of my clients express guilt that somehow they have let others down when they turn to bankruptcy. However given the social and economic times in which we live bankruptcy is not failure it a legal and honest means to get a fresh financial start. As a former older client recently said to me: Tell others in my situation not to feel guilty about filing for bankruptcy. Bankruptcy saved my life. #utahbkguy