Several types of debt, including mortgage, credit card and student loan debt, have doubled or increased even more among seniors in recent years.
Many people in Loveland have heard recent reports of student debt rising higher and credit card debt growing again. It's clearly not uncommon for Americans to face debt problems today, but it can be easy to believe that some Americans, including the elderly, are fairly removed from these problems. Sadly, though, recent data indicates even elderly Americans are struggling to stay financially solvent.
Data shows some debt doubling
According to The Tampa Bay Tribune, debt among older Americans is rising dramatically and affecting a sizable proportion of the population. The following figures from the 2010 U.S. Census, the Government Accountability Office and the Employee Benefits Research Institute highlight this alarming trend:
- From 1992 to 2010, the proportion of adults dealing with mortgage debt after the age of 75 more than doubled, from 10 to 24 percent.
- From 2000 to 2011, Americans over the age of 65 saw their average household debt double.
- From the start of the Great Recession to the present, credit card debt has doubled for Americans who are at least 75 years old.
- From 2005 to present, student loan debt has risen even more dramatically, growing by a factor of 6.
A substantial 46 percent of elderly Americans have no financial assets remaining when they die, and 44 percent of households consisting of people over age 65 are in debt, according to one study. This suggests that debt is just as problematic for older Americans as the general population, since data shows that 44 percent of all Americans either are in debt or have savings to cover less than three months of living costs.
Alarmingly, future changes or cuts to the Social Security and Medicare programs could worsen this problem. Social Security provides a primary form of financial support to nearly half of older Americans, and Medicare is available to virtually all of them. Without these programs, staying financially solvent could be even more challenging for the elderly.
Is bankruptcy an option?
Filing bankruptcy is one way that aging Americans can find relief from growing debts. However, older adults should weigh several factors to determine whether bankruptcy is the right choice.
The nature of the debt is one important consideration. Under the U.S. Bankruptcy Code, many unsecured debts that are common or on the rise among older adults, including medical debt and credit card debt, can be discharged through Chapter 7 bankruptcy. However, other loans, such as student loans, can be considerably more challenging to discharge.
Personal income and assets can also affect whether filing bankruptcy is a reasonable option. For example, filing bankruptcy might not be ideal for elderly people with substantial home equity, since Colorado's Homestead Exemption for people over age 60 is limited to $90,000. However, the chapter of bankruptcy chosen helps determine which assets a person keeps and what kind of financial obligations he or she faces afterward.
Consult with an attorney
Anyone who is considering filing for bankruptcy later in life should first consider speaking to a bankruptcy attorney for more information on the different chapters of bankruptcy and the potential benefits that filing bankruptcy could offer.
Keywords: bankruptcy, debt, Chapter 7, Chapter 13