The number of seniors coming to our office for consultations for Chapter 7 personal bankruptcies is rising. After 33 years of practicing bankruptcy law in Massachusetts, I have antidotal evidence of trends in filings. After the 2008 recession, we had a huge rise of middle age and middle-income folks who came in and just could not afford their mortgage payments. They defaulted on home loans, were forced to move out, but got a Fresh Start, under federal bankruptcy law.
Now, however, we see more older folks coming in. The trend we see matches some statistics from the Judiciary Data and Analysis Office for the US Courts. For example, a recent report indicated that in 1991 2.1% of bankruptcy filings were for seniors while in 2016 the number was 12.2%. Why? Is it health care costs? Is it the fact that there are fewer pensions and seniors were not able to save for retirement? The National Counsel on Aging reports that in 2013 household debt for seniors was $40,900, while it was only $18,385 twelve years earlier.
In a 2017 report by Jonathan Fisher, of Stanford University, it was noted that the “bankruptcy population is aging faster than the U.S. population as a whole.” An unrelated finding by Professor Fisher but a happy one, is that “Income falls before bankruptcy and then rises after bankruptcy.” On the other hand, while generally good news, this is not necessarily helpful to seniors, who don’t generally have “income” later in life, or who struggle mightily to have some income.
The Bible and the Constitution On Bankruptcy
There are generational issues too. Many seniors find it unethical to not pay their creditors, no matter what their personal hardship. They feel a stigma. Nevertheless, some clients report that they look at the Old Testament, in Deuteronomy, where debts are forgiven at the end of seven (7) years. More recently, the U.S. Constitution, Article 1, Section 8, Clause 4, authorizes the Congress to enact “uniform laws on the subject of Bankruptcies. And the president of the United States, himself a senior, has filed for bankruptcy protection numerous times.
In Massachusetts, seniors that own their home can protect it with a Homestead. They may have a better likelihood of a fresh start. But they still have medical and hospital bills that could cause a bankruptcy.
On the other hand, those without home equity, may have a much harder time if they have no assets and a fixed income. And the younger members of their family may have inadvertently robbed them of their assets with college costs, helping for buying homes, and non-remunerative babysitting.
Free Consultation at Burns & Jain in Boston
Attorney Neil Burns has been representing Massachusetts seniors in personal bankruptcy for 33 years. His office, Burns & Jain, offers a free consultation, pre-bankruptcy planning, and an effective way to get a Fresh Start using the state and federal bankruptcy laws.
We know that filing a personal bankruptcy has negative ramifications including reducing your credit score, and making it harder to get loans, including car loans. We can help you plan for that and show you ways to increase your credit score after filing.