The Rising Trend of Bankruptcy Among Seniors
Bankruptcy, traditionally viewed as a last resort for those overwhelmed with debt, is showing an alarming rise among the elderly population in America. A study from the Consumer Bankruptcy Project revealed that the rate of Americans aged 65 and older filing for bankruptcy has tripled since 1991. This escalation poses a series of challenges, not just for the seniors themselves but also for society at large. This article aims to dissect the factors contributing to this rising trend and explore the implications for the elderly population.
Factors Leading to Bankruptcy Among Seniors
Skyrocketing healthcare costs are often cited as the most significant driver of bankruptcy among all who file; the elderly are no exception. In fact, the average amount of unpaid medical debt among seniors (65 or older) was $13,800 as of the year 2020, which saw a 20% increase from 2019, when it was $11,700. According to a study published in the American Journal of Public Health, 66.5% of all bankruptcies were tied to medical issues.
As people age, medical issues become both more severe and more common, increasing the risk of incurring insurmountable debt as a result.
Inadequate Retirement Savings
The generational shift from defined-benefit pension plans to defined-contribution plans, like 401(k)s, has left many seniors with inadequate savings for retirement. A report by the Government Accountability Office revealed that about 29% of households aged 55 and older have neither retirement savings nor a pension. Since 2007, middle-income, older households have seen their retirement balances stagnate at an average of $64,300, all the while inflation and a rising cost of living has deflated the value of that balance.
This means that the elderly, who are already more vulnerable to debilitating and life-altering illnesses, are also becoming less capable of financially enduring the cost of those conditions.
Consequences of Bankruptcy for Seniors
Bankruptcy may lead to asset liquidation, including homes or other property. Though some states have homestead exemptions, these exemptions are often insufficient to cover the full value of a home. Still, the nature of liquidation and exemptions can be complex and affected by the state in which you reside; we recommend clicking here and reading further about bankruptcy liquidation.
Limited Future Earnings
Seniors have less time to rebuild their financial lives, making the decision to file for bankruptcy even more consequential for this age group. Age may preclude an individual from being hired over a younger, less experienced (therefore, less expensive) candidate who could reasonably complete the same task, meaning that the decision to file for bankruptcy or not could have irrevocable consequences for an elderly filer.
Solutions: Hiring a Bankruptcy Attorney
For seniors who are facing medical debt without sufficient retirement savings or proper financial means, a bankruptcy attorney can help you navigate this financial challenge. A qualified bankruptcy attorney can guide you through the complicated legal landscape, helping to protect your essential assets and navigate state-specific rules.
This is not a process that can be completed alone, whether one is a senior or not. Qualified professionals are ready and waiting to examine your financial situation and to guide you through the labyrinthine process of filing for bankruptcy.