Bankruptcy filings soar among seniors

Americans older than 55 are filing for bankruptcy at a faster rate than the general population as growing mortgage debt and higher healthcare costs make them more vulnerable, a new study shows.

The trend of rising bankruptcies among older Americans probably will continue for the foreseeable future, according to the study’s authors, John Golmant and Tom Ulrich, researchers at the Administrative Office of the U.S. Courts.

They found that the aging of the population alone does not account for the rise in older filers and that “bankruptcy courts can anticipate an influx of new bankruptcy petitions as the baby boom generation continues to age.”

Senior researcher Jose Garcia, who examines consumer finance trends at New York-based Demos, said rising costs for housing and healthcare, especially prescription drugs, had made older Americans more dependent on credit. This, in turn, makes them more vulnerable to financial rough spots.

“We see general trends that will definitely impact coming generations,” Garcia said.

The study used data from the courts and public records to track how filing rates among various age groups have changed over time. In 2002, the percentage of Americans older than 45 who entered bankruptcy reached 39%, up from 27% in 1994, the study found.

The steepest increase in Chapter 7 filings, the most common type of personal bankruptcy, occurred among people older than 55.

Golmant and Ulrich also found that the median age of those filing for bankruptcy rose to 41.4 in 2002, up from 37.7 in 1994. The youngest Americans, meanwhile, had a drop in filings, with 4% of Americans younger than 25 filing for protection from creditors in 2002. That fell from 11% in 1994.

Golmant’s and Ulrich’s report will be published in the May issue of the American Bankruptcy Institute Journal.