When we think of bankruptcy, we think of certain groups of the population. Most commonly, we think of students, younger individuals, and first-time homeowners. However, there is one segment of the American population that is catching up when it comes to filing for bankruptcy. That group is senior citizens. Every year, more and more senior citizens file for bankruptcy.
Since 1991, the rate has exploded from 2.1% to 12.2% of senior citizens who file for bankruptcy. Student loan debt is usually not crushing these people. Nor, are they underwater on their mortgage, they are dealing with disproportionate medical debt. Many no longer have reliable health insurance. As they age, their health problems tend to become more complex and expensive.
None of these, however, compare to the devastation of medical expenses. Even when a senior citizen doesn’t have a catastrophic illness or major health problem, the out-of-pocket costs add up quickly. Those on Medicare may still be responsible for significant expenses at the time when their income is limited or non-existent. Recently, the Kaiser Family Foundation found that co-pays and out-of-pocket costs for Medicare accounted for 41% of the average Social Security check. For individuals who rely solely on their Social Security check to survive, that is a hard pill to swallow.
Other seniors have hit the bankruptcy wall after co-signing on loans for their adult children, including student loan debt. When the adult children were unable to pay, the creditors came after the co-signers. Often, the co-signers were in an even more disadvantaged position to pay due to a modest fixed income.
This trend may only be the beginning of a giant wave of senior citizen bankruptcies in the next decade. Many individuals lost significant wealth in the 2008 financial crisis, which was to be a cushion during retirement. The attempts to cut back Social Security and Medicare benefits may be successful thereby cutting that safety net back further. With the ballooning costs of health care, the trend is sure to go up.
It is difficult to see seniors citizens file for bankruptcy. If you or a loved one are facing bankruptcy, it is important to have an experienced lawyer. The lawyer will help you every step of the way so that an already bad situation does not become worse. Karina Lucid is a compassionate and consummate professional. She can help you or your loved-one through this difficult time to make it out to the other side.