If you have considered filing for bankruptcy, then you may understand the feelings of fear and uncertainty that come with it. Though it’s a chance to start over financially, it’s not something most people want in their lives. But for many older Americans, it’s quickly becoming their only option.
A study of bankruptcy filings found that Americans ages 65 and older accounted for about 12% of all filings, an increase from just 2% in 1991. Though the numbers seem relatively low, it signals that more people are finding themselves in financial distress than 30 years ago. It begs the question: why?
Why are more older people filing?
When you think back to the 1990s, it’s not surprising to know that many things have changed since then. Critical finances, including healthcare and student loans, have become a handicap for those just starting out, but what is it that is causing older Americans to file for bankruptcy? As it turns out a few money problems are intergenerational:
- Not enough savings: As the bills pile up, adults may look to their savings to help. But for 25 percent of households, there was only about $3,000 in savings. Not having enough savings removes the safety net and forces those families to rely on their income to pay the bills.
- Out of pocket spending for healthcare: Paying medical bills can be a burden for any age group, and those 65 and older are having an especially difficult time. This can be particularly difficult on low income older adults, who don’t have enough savings or enough income to make ends meet.
- Cosigning on their children’s loans: Some older adults filing for bankruptcy cited helping their children financially as a contributing reason. Parents had cosigned on loans for their children, but when their children could no longer pay them, they took on the burden.
When older Americans are experiencing a decrease in income coupled with rising debt and bills, it can make day-to-day living difficult and make bankruptcy more appealing.
There is a way forward for you
Though it can be scary and make you feel defeated, bankruptcy can help you rebuild. Having the right help in understanding bankruptcy can ease your worries about the process.