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Elder Americans Filing for Bankruptcy Relief on the Rise

High interest rate credit cards, large debt balances and the number of credit cards individually held are among the factors that cause older Americans to seek bankruptcy relief, according to the Consumer Bankruptcy Project. Overall bankruptcy filings in Ohio and across the country remain high.

University of Michigan Law professor John A.E. Pottow recently conducted a study indicating that the number of seniors filing bankruptcy is on the rise. While the country's population is aging generally, the percentage of senior bankruptcy filings is growing faster.

The median age of people filing for bankruptcy in 2007 was 43-years-old. Seven percent of filers were age 65 or over. In 1991, seniors comprised 2.1 percent of the total filings. Rising costs between 1991 and 2007 have possibly hit seniors more harshly. Pottow says his research indicates that seniors may have higher debt-loads in the current economy trying to cover necessary expenses such as medical bills.

Seniors are more likely to have five or more credit card accounts than younger Americans.The median debt-load for seniors filing for bankruptcy relief was $27,213, according to the study. Younger filers were carrying $15,499 in credit card debt.

The researcher believes two factors are apparent in the research that may have affected the numbers. Seniors were less likely to seek assistance from friends and family to cover expenses. Where 35.2 percent of seniors sought assistance from loved ones to cover expenses before resorting to credit cards, the data shows 69.7 percent of younger Americans sought assistance first.

Pottow also believes that the research indicates younger Americans were more likely to seek other avenues to reduce debt prior to filing bankruptcy. 60 percent of the younger filers sought to negotiate or settle credit card debt with the financial institutions before filing bankruptcy. 37.8 percent of seniors sought to resolve bad debt prior to filing, according to the data.

Source: Forbes, "Credit Card Debt Blamed For Surge in Elder Bankruptcy," Janet Novack, 12 Oct 2010

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