Americans over the age of 55 are filing for bankruptcy at a faster rate than the general population as growing mortgage debt and higher health care costs make them more vulnerable, a new study shows. It also appears that the number of bankruptcies among younger people has dropped significantly. The study recently published in the American Bankruptcy Institute's ABI Journal revealed some very interesting information regarding the correlation between age and consumer bankruptcy filings. According to the study, adults born between 1946-1964, known as "baby boomers," comprised 42 percent of all bankruptcy filers in 2007. In addition, the study also determined that Americans 55 and older were filing for bankruptcy at a more rapid pace than Americans 25 and under.
The study, entitled "Aging and Bankruptcy Revisited" was conducted by John Golmant and James Woods. It serves as an update to their innovative 2002 study that also examined the correlation between age and consumer bankruptcy filings.
The primary purpose of "Aging and Bankruptcy Revisited" was to ascertain whether or not the trends discovered in the 2002 study continued after the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Golmant and Woods sought to achieve this by carefully evaluating national bankruptcy filing data from 1994, 2002 and 2007.
Some of the key findings of the study include:
• The total number of bankruptcy filings by people 55+ increased by 61 percent from 2002-2007.
• The average age of those filing for bankruptcy in 2007 was 44.9. In contrast, the average age was 41.4 in 2002 and 37.7 in 1994.
• The younger population (age 25 and under) accounted for a mere 1.7 percent of bankruptcy filers in 2007. In contrast, they accounted for 4 percent in 2002 and 11 percent in 1994.
According to the study's architects, there are three primary reasons why the number of baby boomers filing for bankruptcy is so disproportionate: 1.) high levels of credit card debt 2.) the housing crisis and 3.) increasing health care costs.
Often Baby Boomers also have to bear the brunt of the costs of caring for children and occasionally their parents. They've had to cover rising student loan costs for themselves and their own children. Plus they are often saddled with their parents' nursing home costs. Additionally, some of their retirement savings, which would be more significant than those for younger people, may have been wiped out by the economic downturn.
It seems that there may also be cultural differences between the Boomers and their parents' generation. The generation preceding the Baby Boomers, were more willing to go into debt to provide their Boomer children with the luxuries they didn't have during the Great Depression. The Boomers grew up watching people go into debt. Most of the time, they paid it off, but debt became normal to them, whereas it was a new phenomenon to their parents.
If you are finding yourself crippled by debt, no matter what your age, please don't hesitate to get some expert advice. I offer a free confidential initial consultation, where you can get all your questions about bankruptcy answered.