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| Mark Molnar cleans a restroom in an RV park in Trenton, Maine. Molnar and his wife, Joanne, are "workampers," mainly retirement-age couples who work seasonal jobs at RV parks and camping parks for minimum or relatively low wages during the summer months. (Photo Linda Davidson/The Washington Post) |
We were going over her budget and it didn’t look good.
She
was retired and in her late 60s. Her only income is Social Security.
Between the cost of health care, medicine, food and rent there wasn’t
really anything left over to handle the thousands of dollars of credit
card debt. Credit was the bridge she used to extend her benefit check.
“You need to file for bankruptcy,” I said.
She didn’t say anything for quite some time.
“But I pay my debts, always have,” she finally responded. “Scripture says, the wicked vow and don’t pay.”
For
all of her working life, she had sufficient income to cover her
expenses. But now there just wasn’t enough. Even if she just paid the
minimum due, she would be in her 90s before it was all paid off. The
stress of debt was too much to bear. By the time she got over her
embarrassment to ask for help, bankruptcy was the only viable option.
Filing for Chapter 7 bankruptcy was devastating to
her. Yet, it was what saved her from the increasingly aggressive letters
and calls from creditors. Things are still very tight, but she’s making
her meager ends meet.
Last week, a lot of news
outlets jumped on this detail: Data from the Consumer Bankruptcy Project
show that bankruptcy filings by people 65 and older are climbing.
“The social safety net for older Americans has been shrinking for the past couple decades,” according to the paper “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society.”
“The risks associated with aging, reduced income and increased health
care costs, have been offloaded onto older individuals. At the same
time, older Americans are increasingly likely to file consumer
bankruptcy, and their representation among those in bankruptcy has never
been higher.”
There has been more than a twofold increase in the
rate at which older Americans file for bankruptcy protection and almost
fivefold jump in the percentage of older persons in the bankruptcy
system, according to the research compiled by a group that includes
Deborah Thorne at the University of Idaho, Pamela Foohey of the Indiana
University Maurer School of Law, Robert Lawless of the University of
Illinois College of Law and Katherine Porter of University of California
Irvine School of Law.
“The magnitude of growth
in older Americans in bankruptcy is so large that the broader trend of
an aging U.S. population can explain only a small portion of the
effect,” the researchers wrote. “In our data, older Americans report
they are struggling with increased financial risks, namely inadequate
income and unmanageable costs of health care, as they try to deal with
reductions to their social safety net.”
They report that the median senior bankruptcy filer has a negative net worth of $17,390.
Here’s a chilling proclamation from the report:
“For an increasing number of older Americans, their golden years are
fraught with economic risks . . . Absent significant policy changes that
reassume the risks of aging and effectively insure the financial
stability of older Americans, our data suggest that the trend of an
aging bankruptcy population will continue. For older Americans,
bankruptcy is too little too late. By the time they file, their wealth
has vanished, and they simply do not have enough years to get back on
their feet.”
Last week, I was on NPR’s 1A
to talk about this trend. I was joined on the show, hosted by Joshua
Johnson, by Thorne, the principal investigator of the Consumer
Bankruptcy Project, and by Cindy Hounsell, president of the Women’s Institute for a Secure Retirement (WISER).
Full Article & Source:
Retired and broke: Bankruptcy filings surging for seniors
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