The Rise in Elder Bankruptcy Filings and Failure of U.S. Bankruptcy Law

Abstract

Recent empirical legal scholarship on the consumer bankruptcy system has uncovered a marked rise in the proportion of elder Americans filing for relief under the Bankruptcy Code. But these studies have not probed the reasons behind that rise, an omission this Article seeks to address. Professor John Pottow and colleagues recently assembled the new dataset of the Consumer Bankruptcy Project (CBP), the largest national sample of consumer debtors in this country, which he uses to explore the sources of elder bankruptcy. The findings are both striking and ominous. While multiple factors, such as health problems and medical debts, contribute to elders’ financial distress, the dominant force appears to be overwhelming burdens related to credit cards. Elder debtors carry fifty percent more credit card debt than younger debtors, and they cite credit card interest and fees as a reason for their bankruptcy filings fifty percent more frequently, results that are highly statistically significant. Professor Pottow uses further survey and court record data from the CBP to explore why elders rely upon credit cards more than their younger counterparts. Finally, Professor Pottow addresses the current Bankruptcy Code, noting that it is both a theoretical and doctrinal mismatch for elder debtors, and proposes possible reforms.

Keywords: Consumer Bankruptcy Project, Bankruptcy Code, Elder Debtor

JEL Classification: G33, K30