Bankruptcy Filing By Different Age Groups

Bankruptcy Filing By Different Age Groups

Going through the personal stress of a home foreclosure or a bankruptcy filing at any age is often a life-changing event. Yet, I see that financial problems are treated differently by persons of different generations.

More and more often, bankruptcy is something I see happening to persons who have reached their retirement years--over 65 years of age. It is not that unusual to see couples who have worked for thirty or even forty years at a stretch, slowly saving, only to have a six-month job lay off or health problems push their finances beyond the tipping point, and lose all they have saved over the years. It does not matter to them personally that the main underlying reason for a home foreclosure or bankruptcy is that they experience job loss or health problems, which are beyond a person's control, is little consolidation to them. A bankruptcy filing or foreclosure still leads to a sense of frustration or even humiliation. Alternatively, some couples simply realize that without the same paycheck from work, they cannot retire and pay the same medical or credit card bills they have accumulated through the years, and simply do not know what to do.

The generation over 65 years of age especially does not want their own family or children to know that the years of helping them with their upbringing and education has contributed or caused their own financial ruin. Perhaps it is the pride of the generation that shows through. Many would rather endure the bill collector's calls, letters, lawsuits, and garnishments than have the bankruptcy label become attached to their name. This retirement age group is usually harsher on themselves than any creditor ever would be.

Not so with the under 40 generation. For them a bankruptcy filing is more of an evaluated business decision. As a group, they are less willing to carry an impossible debt load forward through their wage earning years, and more willing to consider the legal option of bankruptcy. They are less concerned with the social stigma of the bankruptcy label associated with their name or on their credit report. When you think about it, who can blame them?

As an example, if a mortgage salesman persuades someone to sign a variable interest rate mortgage agreement at 6% interest, and only a few years later, the interest rate becomes 12%, where is the moral shortcoming or character flaw in the borrower who does not have the extra money? The mortgage lender knew by evaluation the borrower's income at the time of the loan, that the borrower could never pay 12% interest on a mortgage either. As the mortgage lender chose to exercise their legal options when raising interest, the borrowers simply become willing to exercise their legal options by filing bankruptcy. The same analogy applies to credit card debt which has changed from 6% to 29% in some cases. As a group, than with the under 40 generation, if the numbers don't simply add up, they are much more willing to file for bankruptcy protection.

Turnwald Law

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