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Older Americans more likely to file for bankruptcy

On Behalf of | Jan 10, 2019 | Bankruptcy

Older people throughout Texas and the rest of America are facing a greater risk of serious financial problems. On the surface, the numbers may seem promising. There were 1.6 million bankruptcy filings in 2010, a number that dropped to 789,000 annually by 2017. However, the overall decline also includes disturbing information about the financial situation faced by Americans over the age of 55. There are a number of factors that may contribute to growing levels of insurmountable debt among older people, especially as the baby boomer generation emerges into retirement.

While only 2 percent of bankruptcy filings in 1991 were made by people over 65, that number climbed to 12 percent between 2013 and 2016. In the same time period, new filings for bankruptcy fell for people aged 54 and younger; however, older Americans saw a sharp upswing in their demographic. There are a number of broad economic reasons that may contribute to these issues. Social Security covers less of the average pre-retirement income than it did in the past, making it more difficult for retired people to make ends meet. While defined-benefit pension plans used to be a featured perk offered by many employers, pensions are now often restricted to investment-style plans.

Medical costs can be a significant contributor to substantial debt, especially when people are unable to pay the bills that are not covered by health insurance. The Centers for Medicare and Medicaid reported that people over 65, normally covered by Medicare, spent an average of $2,938 each year on out-of-pocket health care costs. This marks a 20 percent increase from 2002.

When credit card balances and medical bills begin to pile up, a debtor may look for a solution. A bankruptcy lawyer can provide advice that can help someone find debt relief. Options include filing for Chapter 7 or Chapter 13 personal bankruptcy.