A Boston bankruptcy lawyer will not ask you your age when offering advice for a Massachusetts bankruptcy. It’s irrelevant. So long as you are of legal age and your income and assets qualify under the “new” 2005 bankruptcy law, we can file a bankruptcy petition and schedules for you. However, it is concerning that the rate of personal bankruptcy filings are up for senior citizens. Our Boston Bankruptcy Lawyer Blog at http://www.bostonbankruptcylawyerblog.com/ set out to see what the research is showing.
In a study published by the University of Michigan Law School, Professor John Pottow shows some hard facts which prove that “[b]ankruptcy filers are getting older.” For example, in 1991, the median age of a person filing for personal bankruptcy was 36.5. By 2001 the median age was 40.6. In 2007, the age was 43. According to the report, the number of elderly personal bankruptcy filers more than doubled from 1991 to 2001 – from 2.1% to 4.5%. The number increased to 7% by 2007. The numbers are taken from the Consumer Bankruptcy Project, in which the professor is a collaborator.
In fact, some of Professor Pottow’s statistics are quite alarming. In comparing the change in filings by age group between 1991 and 2007, his statistics are that in the 18-24 year old age group, the number is down 51.%%; in the 25-34 year old age group, the number is down 40.3%, the 35-44 year old age group, the number is down 8.2%; however, in each age group thereafter, the numbers go up dramatically. The 55-64 year old age group had a relative percentage change of 150.8%; the 65-74 year old age group had a 177.8% increase in personal bankruptcy filings; and, the 75 or older group had a 566.7 relative percentage change in personal bankruptcy filings during those years.
Professor Pottow’s research aimed at determining why elderly bankruptcy filers filed. His surveys showed that credit card debt was the primary reason. And, more particularly, they identified fees and increased interest rates as the cause for filing. In fact 66.6% of those responding to the survey identified credit cards as the cause of their financial situation necessitating filing for bankruptcy. The study compared elderly United States citizens with those of other countries, and found a correlation.
Interestingly, the study looked beyond just what they said, but compared what they said to the actual debts recorded on the Federal Bankruptcy Petitions and Schedules. Older bankruptcy filers had almost twice the credit card debt as younger bankruptcy filers. The “definite credit card debt” among those under 65 was $13,615 while the “definite credit card debt” for those over 65 was $22,562. The study could not determine the “why” but does offer lots of rational speculation and cites ongoing studies for determining the cause of the underlying differences. Among those reasons are incompetence regarding handling financial affairs, elderly are less comfortable asking friends and family to borrow money and helping others with their financial situations.
Another factor, albeit unfortunate, is that the data shows that the older debtors are poorer than other bankruptcy filers. In fact, they are “disproportionately poorer than the younger filers.” This data looked at monthly income, unsecured debt, unsecured debt-to-income ratio. Many had retired but then returned to work. Alarmingly, 9.7% of those responding to the survey reported that they had gone without food prior to filing bankruptcy.
Professor Pottow finds “one of the most sobering finding” is with the baby boomers coming of elder age, this is an “ominous portent of what may await” them. He calls it the “canary in the coal mine.” He points out that while medical bankruptcies are a problem, there is a growing and dangerous problem with credit card bankruptcies for the elderly.
While he does not pose specific solutions, he raises lots of ideas worth considering: relaxing restrictions on discharging credit card debt, reducing medical bankruptcies within the health care system which would reduce credit card bankruptcies, and offering age specific relief regarding tax rates.