A study conducted in 2007 showed a gradual aging of the typical bankruptcy filer, with filers over the age of 45 accounting for a larger percentage of overall filers.
A new study was undertaken recently to determine whether the effects of the economic downturn, housing crisis and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 had an impact on that segment of the population.
The results of that study were the subject of an article in the November issue of The Third Branch Newsletter, a monthly publication of the Administrative Office of the U.S. Courts Office of Public Affairs.
According to the article, John Golmant, who conducted the original study, and social science analyst James Woods, both of the AO’s Statistics Division, reviewed 822,590 Chapter 7 and Chapter 13 bankruptcy filings for the 12-month period ending December 31, 2007.
Those two chapters account for 99.9 percent of all consumer filings, the publication stated. It was noted that filers’ birth dates were obtained using outside data sources for a sampling of 2,100 cases.
According to the Third Branch article, Golmant and Woods found that the middle–aged still file the bulk of bankruptcies.
The median age for bankruptcy petitioners increased from 37.7 years in 1994 to 41.4 years in 2002 to 44.9 years in 2007.
The figures showed that bankruptcy petitioners over the age of 45 constituted 27 percent of filers in 1994, 39 percent in 2002, and 50 percent in 2007.
That middle-age filers are accounting for an increasing percentage of overall filers, according to the article means that “baby boomers” — those who attained the ages of 43 through 61 during 2007 — are disproportionately represented in bankruptcy proceedings.
The researchers said several indicators showed this age group to be facing financial difficulties. Among other things, they noted that 28 percent of all mortgage delinquencies and foreclosures were for persons 50 years and older.
At the same time, the researchers said, the net worth of the middle-aged and older has declined. Additionally, they noted that credit card debt may play a role as the median value of credit card debt of those aged 55 to 64 increased 9 percent between 2001 and 2004 and 50 percent between 2004 and 2007.
For those aged 65 to 74, median credit card debt increased 25 percent from 2004 to 2007, they said.
The article said the effect of the bankruptcy reform initiative on the composition of filings by age was difficult to gauge, according to the authors of the study. There has been an increase in Chapter 13 filings which the authors said might be aimed at postponing foreclosure.
The study showed, however, the fastest growth in Chapter 13 filings occurred in those debtors between the ages of 55 and 64.
“Given that the proportion of Chapter 13 petitions filed by 55- to 64-year-olds increased dramatically, and given that this age group also contributed to a significant number of foreclosures, it seems plausible that the two phenomena are linked,” the study concluded.
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