The fastest growing segment of our population is 75-85 and older, and so is the rate of their personal bankruptcy. According to the National Consumer Bankruptcy Project at Harvard, in 1991, those who were 55 or older accounted for about 8 percent of bankruptcy filers. In 2007, they accounted for 22 percent. The filing rate of those between the ages of 65 and 74 rose by 125 percent. However, for those between 75 and 84, The bankruptcy rate rose by 433 percent. Illness and injury now contribute to more than 55% of all bankruptcy filings (as illness increases with age so do bankruptcy filings).
Another Lawyer, Sandra Freeburger, an Evansville Illinois bankruptcy attorney, said she sees seniors citizens who are also hurt by adjusted interest rate mortgages on their houses. Also common are those who cannot afford prescription drugs at the same time as car loans and other debt. Or a person’s spouse may die, cutting in half the fixed household income.
Young folks seem less likely to think of declaring bankruptcy as dishonorable thing to do. Yet a reluctance to seek protection from the courts can be particularly harmful to an elderly person, especially if they use savings placed in a 401k account to pay off debt. If they had declared bankruptcy, that money would have been protected from creditors.An aversion to bankruptcy can be a “detriment to their financial future,” Freeburger said.
What to do: Once again relationships are critical to opening the door to talking about finances. The shame and embarrassment of bankruptcy and perceived financial ruin, among those who are 75 and older, contributes dramatically to depression and suicide. It is important to see how their financial situation impacts their daily lives, mobility and health - such as checking on food in the refrigerator, automobile insurance, gas, shopping, prescriptions ... by taking time to talk about "the hard stuff" with them.
The most common description of elderly responses to the converging perfect storm of financial ruin that is triggered by out of control medical costs, variable rate mortgages, credit card debt, heating and cooling costs, masked by shame and embarrassment; is that instead of taking action, they often "freeze" and do nothing, feeling powerless, and alone.
Making the time - taking the time for safe conversation, negotiation, mediation, exploring options, and unloading the emotional baggage and confusion surrounding this rapidly rising financial crisis, is critical. At a very personal level, this experience transcends for many the idea of recession. Once again it is reliving the desperate times of the Depression.
Postscript: When we rewrote the bankruptcy rules, it became a punitive response to those, who we were lead to believe, were using bankruptcy to avoid bill payment. This is a familiar pattern of blaming the victim to justify protecting the predatory lender. For example; more than 60% of women on welfare are victims of domestic violence, where he controls the purse string. Here's the choice: Stay home and be beaten, or escape - at the risk of your life - onto the street, destitute and homeless with your children.
In fact, the new bankruptcy laws protect the very banking and credit card institutions who saw an unregulated gold mine in usurious credit card interest payments, and balloon & variable rate mortgages issued to millions of unqualified recipients. Of course when energy costs skyrocketed, along with their interest, mortgage payments and layoffs - the outcome was predictable.
Now, with billions in losses; magically, the treasury and congress are finding billions to bail out these same financial institutions .... while leaving in their wake, hundreds of thousands of at risk women, and now destitute elderly. Only a small fraction of those experiencing foreclosure are eligible for bailout.
None of these new bailout provisions restructure the existing bankruptcy laws, as strongly urged by the report from the National Consumer Bankruptcy Project. This is a powerful report and well worth the read.
This is a rapidly ballooning epidemic, and it is an outrage of horrific proportions.
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