Bankruptcy filings among the Baby Boomer generation are skyrocketing – a five-fold increase over 25 years!
So many Boomers are filing that every seventh bankruptcy filer is age 65 or older – more than 14 percent. In 1991, only 2 percent of bankruptcy filers were 65 or older.
Most seniors seem to file Chapter 7 or Chapter 13 bankruptcy.
Those filing under Chapter 7 basically have all their debts forgiven, though their assets are liquidated in the process. But when these seniors co-sign for their kids’ or grandkids’ student loans, which happens often, the obligation isn’t forgiven. It can actually be deducted from Social Security payments.
Seniors with significant equity in their house tend to file under Chapter 13. This spreads debt repayment over the course of a few years. It also allows people to keep their homes, in general.
Of course, the population of seniors as a percentage of the overall population is growing. But it doesn’t explain the huge increase in bankruptcy filings by those age 65 and older in the last quarter century.
This is all part of a larger trend of socioeconomic forces. People are living longer. Health care costs more. Many folks have a small pension (or none at all), and little or no savings to speak of.
Even worse, many seniors carry significant debt. Several of today’s seniors were raised by Depression-era parents who were against borrowing. That’s all flipped. Credit card debt today is huge.
According to the latest Federal Reserve Survey of Consumer Finances, 20 percent of Americans age 75 and older were in debt in 1989. By 2016, almost half were in debt.
Just because the government spends beyond its means doesn’t mean you can too!
Any way you slice it, this is frightening stuff.