The Rise in Elder Bankruptcy Filings

The Rise in Elder Bankruptcy Filings and Failure of U.S. Bankruptcy Law (pdf)

These findings further support the concern that the swelling ranks of elder Americans filing bankruptcy are simply running out of money. And when they do, the picture it is not pretty. For example, 9.7% report having gone without food while struggling before bankruptcy, 31.2% being late on rent or mortgage, 31.2% going without required medication (47.1% for the subset who filed for “medical reasons”), and 21.2% skipping doctors’ appointments (30.6% for the subset who filed for “medical reasons”).81 Thus, one of the most sobering findings of the CBP data may be this stark fact that although all bankrupt debtors are in tough financial straits, the elder filers are in really tough straits – an ominous portent of what may await the baby boomers.82 Whether this is related to the escalating costs of health care is certainly a possibility,83 just as is the prospect that the abolition of the defined-benefit pension plan is playing a role.84 It may also simply be the “financial shock” of retirement itself that elder Americans are ill-suited to face.85 (Recent data found credit counseling applicants citing “retirement” as a cause of financial distress among 5.4% of respondents; given only 9.4% of respondents categorized themselves as retired, this suggests that retirement has required pre-bankruptcy credit counseling for more than half of retirees.)86 Further exploration of these conjectures must await future study. The relevant observation for now is that credit cards may be a short-term (and ultimately unsuccessful) financing solution for the elder debtors to a structural financial deficit.87 If Americans cannot live out their senior years, even on Medicare, on their current incomes without relying on credit cards and then going bankrupt, we may be seeing early evidence of a deep societal problem of overindebtedness.