Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society

33 Pages Posted: 18 Aug 2018  

Deborah Thorne

University of Idaho

Pamela Foohey

Indiana University Maurer School of Law

Robert M. Lawless

University of Illinois College of Law

Katherine M. Porter

University of California - Irvine School of Law

Date Written: August 5, 2018

Abstract

The social safety net for older Americans has been shrinking for the past couple decades. The risks associated with aging, reduced income, and increased healthcare costs, have been off-loaded onto older individuals. At the same time, older Americans are increasingly likely to file consumer bankruptcy, and their representation among those in bankruptcy has never been higher. Using data from the Consumer Bankruptcy Project, we find more than a two-fold increase in the rate at which older Americans (age 65 and over) file for bankruptcy and an almost five-fold increase in the percentage of older persons in the U.S. bankruptcy system. The magnitude of growth in older Americans in bankruptcy is so large that the broader trend of an aging U.S. population can explain only a small portion of the effect. In our data, older Americans report they are struggling with increased financial risks, namely inadequate income and unmanageable costs of healthcare, as they try to deal with reductions to their social safety net. As a result of these increased financial burdens, the median senior bankruptcy filer enters bankruptcy with negative wealth of $17,390 as compared to more than $250,000 for their non-bankrupt peers. For an increasing number of older Americans, their golden years are fraught with economic risks, the result of which is often bankruptcy.

Keywords: Bankruptcy, Older Americans, Risk, Economic Insecurity, Debt, Wealth, Safety Net

JEL Classification: D10, K35, K36

Suggested Citation

Thorne, Deborah and Foohey, Pamela and Lawless, Robert M. and Porter, Katherine M., Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society (August 5, 2018). Available at SSRN: https://ssrn.com/abstract=3226574

Deborah Thorne (Contact Author)

University of Idaho ( email )

Moscow, ID 83844
United States

Pamela Foohey

Indiana University Maurer School of Law ( email )

211 S. Indiana Avenue
Bloomington, IN 47405
United States
812-855-1257 (Phone)

Robert M. Lawless

University of Illinois College of Law ( email )

504 E. Pennsylvania Avenue
Champaign, IL 61820
United States

Katherine M. Porter

University of California - Irvine School of Law ( email )

401 E. Peltason Dr.
Ste. 1000
Irvine, CA 92697-1000
United States

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