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Bankruptcy rate increases for older Americans

| Nov 2, 2018 | Firm News

For many people, filing for bankruptcy is the only way to get out of immense debt. Although any person or business may need to file for bankruptcy, there is an unfortunate trend popping up all over the country, including North Carolina. 

A report from Fox Business outlines how the rate of bankruptcy has increased for Americans over the age of 65 in recent years. The number of senior citizens who have required bankruptcy has increased substantially over the last couple of decades. In 1991, only 2.1 percent of all people who filed for bankruptcy in the country were seniors. That number has since increased to 12 percent, meaning over 97,000 senior households today need bankruptcy. 

Factors that have led to this increase

There are two primary factors responsible for this increase in senior bankruptcies. They include an overall decrease in income in addition to the rise in healthcare costs. Senior citizens have more health problems than the rest of the population. While insurance can help to an extent, there are circumstances where insurance will not cover a given procedure or prescription. As a result, many seniors end up in medical debt because they cannot pay for life-saving treatments. As a result, many have to continue working, but wages have stagnated. In addition to paying for housing costs and food, there may not be enough money left over to pay for anything else. 

The dangers of Social Security

As observed with recent trends, the rate of seniors filing for bankruptcy will likely not decrease any time soon. In 2018, the total costs associated with Social Security surpassed total income for the first time ever since 1982. Trustees foresee that 100 percent of benefits can go out up until 2034. After that point, only about 79 percent of benefits can go to recipients. That means younger people may have to start saving now to avoid going into debt during their golden years. 

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