Seniors filing for bankruptcy at accelerated rate

Americans 55 and older are filing for bankruptcy at an increasing
rate, according to the study Aging and Bankruptcy Revisited. 

The
report will appear in the September issue of the ABI Journal by
the American Bankruptcy Institute. It shows that while middle-aged
Americans make up the bulk of bankruptcies, for those 55 and over,
filings increased 61 percent from 2002 to 2007, the most recent year
examined by the study. 

The findings show Baby Boomers, those born between 1946 and 1964, accounted for 42 percent of all filings in 2007. Also, the median age of bankruptcy filers increased to 44.9 years of age in 2007, from 41.4 years old in 2002 and 37.7 years of age in 1994.

The study’s author’s, John Golmant and James Woods at the Administrative Office of the U.S. Courts, contend the growth in older Americans filing for bankruptcy cannot be accounted for simply because the country is skewing older. 

“This significant demographic uptick in older bankruptcy filers has outstripped the aging of the general population as a whole,” they wrote. 

The financial crisis appears to be the culprit. 

“The recent housing crisis has worsened the already precarious financial condition of many older Americans,” the study states. 

States that experienced decreases in the home price index had an 118 percent increase in bankruptcy filings, which the study shows that the collapse of the housing market left many Baby Boomers with little to no home equity to help them weather the financial storm.  

The demographic that experienced the largest percentage drop in bankruptcy filings were Americans under age 25, who accounted for 1.7 percent of filers in 2007, as compared to 4 percent in 2002 and 11 percent in 1994.