In the past few years, there have been many reports showing that the economy is as hard on senior citizens as anyone else. In 2010, for example, the number of Chapter 7 and Chapter 13 bankruptcies filed was at the highest it has been since 2005, which is the year that the bankruptcy law changed. Seniors between the ages of 55 and 64 made up 27 percent of those filers, and those over 65 accounted for 8.3 percent.
What causes seniors to face overwhelming debt? In the past, the main culprit was always medical bills. While this continues to be a principal factor, credit card debt, interest and fees have taken the number one spot. More than 60 percent of people over 60 said that they were drowning in credit card debt. In part, this is because older Americans have begun to accept credit cards as a way to pay back the debt they accrue from medical bills and other significant costs.
Seniors are also living longer than ever before, which means they pay more for healthcare and may refinance their homes more often in order to pay off debt. Unlike other borrowers, Seniors usually do not have a strong income flow and must rely on Social Security checks and other monthly benefits to pay all of their bills and taxes.
The bottom line is that seniors face the same debt as many other age groups and often do not have the resources to combat it. Bankruptcy is more than a positive option for them; it is often the only option. Through bankruptcy, many senior citizens can discharge all of their debts and let their pocketbooks breathe easier once again.
Source: AARP Bulletin, “Bankruptcies Up for Older Adults,” Bob Calandra, Jan. 6, 2011.