A study released in the September issue of the ABI Journal found that Americans ages 55 and older are filing for bankruptcy at an increasing rate.
The study, “Aging and Bankruptcy Revisited,” was written by John Golmant and James Woods at the Administrative Office of the U.S. Courts to update a 2002 study that examined the degree to which bankruptcy filings are a function of age. While the bulk of bankruptcies are filed by middle-aged Americans, the percentage of filers ages 55 and over grew 61 percent from 2002 to 2007, according to Golmant and Woods.
“This significant demographic uptick in older bankruptcy filers has outstripped the aging of the general population as a whole,” Golmant and Woods wrote.
The study found that the median age for bankruptcy filers increased to 44.9 years of age in 2007, from 37.7 years of age in 1994 and 41.4 years of age in 2002. The demographic that experienced the largest percentage drop in bankruptcy filings were Americans under 25 years old; they accounted for only 1.7 percent of filers in 2007, as compared to 4 percent in 2002 and 11 percent in 1994.
Golmant and Woods updated their study to determine whether the age trends examined in their previous study continued after the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The authors analyzed samples of 2007 national bankruptcy filing data and compared it with data from 1994 and 2002.
“Baby Boomers” (born between 1946-1964) accounted for 42 percent of all filers in 2007. “The recent housing crisis has worsened the already precarious financial condition of many older Americans,” the study said. States that experienced decreases in the home price index had a 118 percent increase in bankruptcy filings, showing that the collapse of the housing bubble left many Baby Boomers with little or no home equity.
The study also found that one of the effects of BAPCPA has been an increase in the percentage of chapter 13 filings, but that it was difficult to gauge whether BAPCPA itself is causing the trend. “Another possibility is that, due to the mortgage crisis, more debtors were trying to postpone foreclosure on their homes by filing chapter 13,” according to the study.