The number of bankruptcies filed in Tennessee and around the country by individuals 65 years of age or older is five times higher today that it was just 25 years ago, and one in seven petitions are now made by senior citizens. These are just two of the worrying trends identified by the team of academics behind the Consumer Bankruptcy Project.
The trend is expected to continue for several more years as the baby boom generation retires. Experts say that older Americans are running into financial problems because they are living longer and face increasingly high medical expenses not covered by Medicare. Few senior citizens have company pensions and their savings are often scant, which prompts many of them to turn to easy forms of borrowing like credit cards to make ends meet. According to a U.S. Federal Reserve survey, almost half of Americans over the age of 75 are carrying at least some debt. In 1989, that figure was about 20%.
The widening wealth gap is also playing a role. The household wealth of upper-income Americans had recovered completely from the 2008 financial crisis by 2016, but middle and low-income families are still struggling. According to figures from the Transamerica Center for Retirement Studies, almost one in four retirees in the United States earns less than $25,000 per year.
Older Americans were raised by a generation that endured the Great Depression and World War II, and they are often reluctant to file for bankruptcy because of they were brought up to believe that people should always pay their debts. Attorneys with experience in this area could dispel many of the myths surrounding personal bankruptcy and explain how the nation's debt relief laws were written to give Americans an escape from overwhelming bills and the chance of a fresh start.