Is Bankruptcy a Good Option for Senior Citizens?


Older Americans Are Turning Towards Bankruptcy

A disturbing trend is being noticed amongst bankruptcy filings over recent years. More and more older Americans are now choosing to file for bankruptcy and are having to put off dreams of retirement longer than in generations past.

According to a recent study issued by the Consumer Bankruptcy Project, between February 2013 to November 2016, there were approximately 3.6 bankruptcy filers for every 1,000 people between the ages 65 and 74. In comparison, in 1991, there were only 1.2 filers for every 1,000 individuals in that same age demographic.

The filers in this age demographic are also constituting a larger portion of total filings in the U.S. Individuals above the age of 65 now make up 12.2 percent of all bankruptcy filings. This age demographic only represented 2.1 of all filings in 1991.

Why is this happening?

Unfortunately, the jump coming with the aging of the Baby Boomers cannot even explain this sharp increase but can be attributed more to structural shifts.

Many speculate that the cause for this trend has to do with rising medical costs, the lack of savings independent from a pension plan and the inability for Social Security to cover needed expenses.

Individuals in this age group were always told they would be able to rely on resources from the government, including Social Security, government-funded pensions and Medicare, but they are now being told that it is their personal responsibility to contribute to their own 401(k) savings plans, as well as pay out-of-pocket for unexpected medical costs.

As incomes are declining and retirement being delayed, this is spelling disaster for many of these individuals looking towards retirement.

The study showed that these older people have fewer options to help them in the event of a financial crisis or sudden and unexpected expense. It can be hard enough for these individuals to find and keep one steady, well-paying job, but facing an unexpected bill can put these Americans, who are on a small or set income, in a very tight financial bind. Many of them are now turning towards bankruptcy as a way to get out of this situation.

How can bankruptcy help older Americans?

The problem with bankruptcy is it’s meant as a fresh start for people who are facing a financial crisis. However, it can take years or even decades before an individual can get back to where they need to be financially post-bankruptcy.

Regardless, bankruptcy still may be the only option for them. For one, filing for bankruptcy can put an immediate halt to the collection efforts and continuous communication from collectors through the automatic stay. Debt collectors tend to be quite persistent in their efforts, and this type of communication can be a huge amount of stress on these individuals.

Going through Chapter 7 bankruptcy allows these individuals to put a stop to the collections and calls from collectors, and it can also take the burden of this unsecured debt off of their shoulders. This relief can go a long way in making their lives more manageable and less stressful. Therefore, while it may be the case that the “fresh start” offered through bankruptcy may come too little, too late, it still can go a long way in helping these struggling, aging Americans.

If you are an individual above the age of 65 and are struggling financially, it can help to at least contact a bankruptcy attorney to discuss the possible options. The attorney can educate the potential filer on the different types of bankruptcy available to him or her, including Chapter 7 or Chapter 13 bankruptcy, the pros and cons for each option and which option would work best for the individual.

If bankruptcy is not the best choice, a bankruptcy attorney can still help discuss what other alternatives are available and can even work with the individual on negotiating the debt down with the debt collector and putting an immediate stop to any communication that is abusive, threatening, and in direct violation of the Fair Debt Collections Practices Act.

The key is to remember that you are not alone, and resources are available if you find yourself in this situation.


An experienced Texas bankruptcy lawyer can help you with any questions you may have about how the filing will affect your credit. Please call the Law Office of Marilyn D. Garner at (817) 505-1499 for a free consultation to discuss how bankruptcy may help you.

Source: Thorne, Deborah and Foohey, Pamela and Lawless, Robert M. and Porter, Katherine M., Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society (August 5, 2018). Available at SSRN:
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