Overall, consumer bankruptcy filings have remained relatively steady across America. For one demographic, however, the rate of bankruptcies has more than tripled since 1991: retirees over the age of 65. More than 12 percent of filers are now age 65 and older, up from 2.1 percent just a generation ago.
Why are retirees seeking bankruptcy protection?
Older people are filing for bankruptcy in retirement for several reasons:
- Loss of health insurance (along with rising medical costs)
- Lost pensions (common when their former employers go bankrupt)
- The need for long-term medical care, especially at a pricey nursing home or other residential care facility
- Less income in retirement
- Harassment by debt collectors
- Inadequate savings for the longer retirement associated with lengthier life spans
These financial difficulties are leading more retirees to put expenses on their credit cards, to accrue unmanageable medical debt, and to have trouble making mortgage payments. Some of them are turning to bankruptcy as a way to get out from under a mountain of debt while saving their homes from foreclosure.
Retirees are unlikely to take out new mortgages or need new vehicle loans, so they might not be as concerned about the “hit” to their credit from a bankruptcy filing. Whereas a younger person might try many different methods before resorting to bankruptcy, retirees are unlikely to have the same worries.
Filing for bankruptcy isn’t a “quick fix,” nor is it to be taken lightly by a debtor of any age, but when debt becomes inescapable, and the threat of foreclosure looms, a consumer bankruptcy filing may be the best solution to put an end to creditor harassment, and to discharge existing debt.