Why are seniors are filing more and more bankruptcies?

As reported on Fox Business, according to something called “Consumer Bankruptcy Projects”, senior citizens (55 to 64 years old) are filing more bankruptcies now than they did in 1991.  In 1991 they filed only 6.1% of all bankruptcies.  By 2007 that number had risen to 15.3% and by 2009 it was up to 16.9%.

The numbers for the 45-54 year olds increased from 15.8% to 23.5% during the same period.  The numbers declined for the 35 to 44 year olds and for the 18 to 24 year olds the percentages declined even further.  The younger people seem to be filing a smaller and smaller percentage of the bankruptcies and the older folks are taking up the slack.  My question is- are the younger getting more responsible and the older folks less responsible?

According to the study the reason for this is mainly credit cards.  The older people are getting more credit card offers and they are using them.  Older folks are apparently more likely to have 5 or more cards which is a dramatic increase over the last 16 years.  Apparently seniors are less likely to negotiate with their credit cards for lower interest rates or payoff amounts.  They seem to accept and thus get stuck with whatever the credit card company gives them.

The other factor that the study points out is that seniors (55 to 64 years old) are also likely to be paying for their children and their parents simultaneously.  People are living longer and this age group often has living parents who need care.  Their medical care can be expensive and seniors often turn to their credit cards and lines of credit to pay the medical debts of their parents.

Seniors may also have adult children who need help with their families so they turn to their parents who turn to credit cards and lines of credit.  Sometimes these children get their parents to sign onto business loans to start businesses which ultimately fail.   The parents then become responsible for the debt.

I have noticed a just such a change with my clients.  I am seeing more and more seniors with credit card debt who are in need of a bankruptcy.  They often have significant credit card and personal loan debt.  They are often very ashamed that they have such debt but according to this study it is indeed very common.

The study predicts that as the baby boomers age the numbers of seniors who file bankruptcy will increase.  Having the financial responsibility of care for both parents and children can really be expensive for this age group.  It is not surprising then why they get into debt and need a bankruptcy.

I am hoping that people can at last not be ashamed that they must file for bankruptcy.  I am convinced that it is a financial decision that should carry no shame.

I am a bankruptcy attorney practicing bankruptcy law in San Diego.  Please visit my website for further help at www.farquharlaw.com.

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Why are all those baby boomers filing bankruptcy? Isn’t it just for the very young and old?

According to the American Bankruptcy Institute (ABI) 42% of bankruptcy filers were between the ages of 45 and 64 in 2007.  Apparently the baby boomers are filing faster than any other age group and the number of  boomer filers rose 65% from 2002 to 2007.

If you thought that bankruptcy was just for the irresponsible young or for older people who are retired and without an income then you would be wrong.  In fact bankruptcies for younger filers has dropped by 60%.

Many different types of people of all ages are filing for bankruptcy.  Many of my clients are in the baby boomer age group as I am.  Often they have been living off of credit for a long time and they may have suffered a job loss or they may have started a business that has failed.  Many people start these businesses on credit and when the business fails there is nowhere to go but into bankruptcy.

Also baby boomers are likely to have a house and children both of which can cost a lot of money (don’t I know it).  The housing prices have collapsed so there is no more equity to borrow out and many cannot afford the house payment they currently have along with the other credit payments.  Many have unpaid student loans and some have aging parents who need care and money too.  Often boomers’ aging parents have issues related to their health that they can’t handle alone.

In other words baby boomers are like everyone else only more so.  More likely to have kids, a job loss, a house, dependant parents and of course more debt.  It is not surprising to me then that they have to go bankrupt in large numbers.

So it’s not just the young and old that file anymore.  It’s the boomers who have been hit by recession, housing crisis, and unemployment and its the boomers that are shouldering the burden of their kids and their parents.  Its their turn but they sometimes can’t do it all without help.

Any questions about bankruptcy please visit my website at:

www.farquharlaw.com

I am a bankruptcy lawyer practicing bankruptcy law in San Diego.