Credit debt blamed for rise in elderly bankruptcy
A new report links the rise in bankruptcy among the nation’s elderly population to credit card usage.
The study, conducted by University of Michigan Professor John Pottow, concluded that two-thirds of seniors that filed for bankruptcy in 2007 cited credit card interest and fees as the primary reason for filing.
Nearly half of elderly participants owned five or more credit cards and were reported to carry a median credit card debt of $27,213. The study also found that the elderly were less likely than younger debtors to work with their creditors or ask family members for assistance before filing for bankruptcy, according to Forbes.
Pottow believes the recently passed CARD Act may help curb the problem.
“I would like to think that with greater and simpler disclosure (of interest rates and fees) some subset of elderly people wouldn’t take out the cards so much,” Pottow told Forbes.
The study noted that the seniors relied on credit cards as a way to pay necessary expenses and medical bills.
Since 1991, the bankruptcy rate for seniors has risen from 2.1 percent in 1991 to 7 percent in 2007.