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Rise in Number of Seniors Filing for Bankruptcy

On Behalf of | Mar 10, 2014 | Bankruptcy |

A recent law review article by Professor John Pottow of the University of Michigan School of Law has drawn attention to the fact that seniors are filing for bankruptcy at increasingly alarming rates. In his article “The Rise in Elder Bankruptcy Filings and the Failure of U.S. Bankruptcy Law,” the Professor points out that the age 65 and over group in his statistical sample of cases was the fastest growing demographic filing for bankruptcy–with bankruptcy filings increasing 177.8% for those aged 65-74 between 2001 and 2007, and an amazing increase of 566.7% for those aged 75 or older between 2001 and 2007.

But why is this happening? According to the Professor:
The data suggest a phenomenon driven largely, although not exclusively, by credit cards. For example, credit card interest and fees are the most cited reason for filing bankruptcy by elders, with two-thirds of elder debtors specifically invoking this reason, substantially more than the half of younger debtors who do so. Findings also reveal that the median elder debtor in bankruptcy carries fifty percent more credit card debt than the median younger filer. 19 Elder Law Journal 220 (2012).

It is clear that fixed incomes and rising debt levels are causing major financial problems for seniors. After a lifetime of hard work, it can be difficult for seniors to face the possibility of bankruptcy. In fact, the Professor argues that the traditional “fresh start” provided by bankruptcy laws does not work as well for seniors. For example, he points out that seniors have less time to rebuild their earnings after bankruptcy, as well as less time to consume. In addition, seniors are at a point of diminished earnings in their work-lives. Seniors are not supposed to rely on future earnings, but upon accumulated savings. “The bankruptcy system’s parsimonious treatment of savings and its pre-occupation with future income is poorly suited to an elder debtor.” 19 Elder Law Journal at 253.

Even though social security benefits and retirement income cannot be garnished by creditors, many of my elderly clients file bankruptcy to stop the harassing telephone calls and possible embarrassment in having a court judgment rendered against them. If the senior has some assets, depending on how much they have and the type of assets they own, will determine which chapter of bankruptcy we recommend.

The attorneys at the law firm of Margulies & Associates, LLC have assisted thousands of seniors through the bankruptcy process and are sensitive to their needs. Please call us for a consultation today. Laura Margulies is a principal and Fred Nix is an associate in the law firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia. To learn more about our firm visit our web site at