Posted on 08/11/2004 2:11:55 PM PDT by ex-Texan
New Faces in Bankruptcy Court: The Middle-Aged
AccountingWEB.com - August 09, 2004 - Just when many baby boomers expected to be settling into their comfortable homes earned from a lifetime of hard work, they’re finding themselves in bankruptcy court instead. The reasons are numerous; the circumstances complicated. Bankruptcy attorneys are accustomed to helping young people who have overextended themselves with credit card debt and the expenses of starting a new home and family. The faces they see now, however, are lined with a history of hard work and the burden of caring for both their children and their parents. A shaky job market and soaring medical costs have also taken their toll on the middle-aged.
"These people didn't take their credit cards to Atlantic City," says Gabriel Del Virginia, a New York bankruptcy attorney. "It's largely because people lost their jobs or had a catastrophic illness."
According to the Wall Street Journal, the Consumer Bankruptcy Project says that on a per capita basis, older people are now the most likely to file for bankruptcy. The study surveyed 2,400 bankruptcy filers in 2001 and 1991. In 2001, per capita filings of individuals ages 45 to 54 increased 58 percent, to 11 per thousand.
"The curve is moving to the right," says Elizabeth Warren, a professor at Harvard University Law School, who co-authored the study. "It reflects a more frightening reality for a wide swath of middle-class America."
Warren told the Journal that heavy family responsibilities play a role in the number of bankruptcy filings. People are living longer, so middle-age Americans are now eight times as likely to have a living parent as previous generations, she says. And since many people waited to have children later in life, tuition bills come later too.
Middle-age consumers have also been victims of years of aggressive credit card marketing, but relying on plastic to cover expenses in tough times has only made things worse.
In recent years, the credit-card industry has begun raising interest rates when a person's payments are late, or when their total debt passes a certain level. One woman who filed for bankruptcy due to medical expenses of kidney failure, had interest rates in the 11 percent range until she racked up a lot of debt. Now, the rates are 25.9 percent. The late fees are as high as $285 a month.
Personal bankruptcy attorneys said middle-age filers make a few common mistakes, mainly waiting too long to seek help. Homeowners often try to pay down their credit-card bills by taking equity out of their homes, but in a personal bankruptcy filing, credit-card debts and other unsecured debts are wiped out. Home-mortgage payments aren't. Cashing out a retirement plan to cover debts could backfire too, since retirement plans are protected in bankruptcy.
Mounting credit-card debt led Mark Taylor, 43, to file for bankruptcy early last year. After he lost his job and turned to consulting, he saw his work evaporate as the economy slumped. He started using credit cards to cover expenses.
Now he keeps a credit card only to rent cars. Learning to be debt-free "is a liberation I can't even begin to describe," says Taylor, who is now working as a legal assistant at a New York law firm.
This might not be the key to total happiness, but it's maybe 85% of happiness.
I expect the usual parade of snooty freepers to sneer about "losers" who were "living above their means" but the age of 45-65 is when Americans
1. Pay their mortgages AND
2. Support their parents AND
3. Put kids through college AND
4. Save for their own retirement
When you consider that corporate America does not want older workers a major illness could bankrupt just about anyone.
I am graced to be debt free. I don't have all the gadgets and doo-dads I want but I owe no one nothing except of course the tribute I pay to the government for the privilege of living in my house. I however know it is grace, I had good breaks. I also used self restraint in keeping my spending under control.
This is not to say that things could not go bad for me. Unlike some of the holier than thou art here at FR I know bad stuff, like medical bills, job loss, sickness, etc. can happen. I know a some people who have gone down hard because of things beyond their control.
45-65 is when Americans
1. Pay their mortgages AND
2. Support their parents AND
3. Put kids through college AND
4. Save for their own retirement
Yep, you pretty much nailed it.
Amen, this site has some sickos that take glee in others misfortune. To look down on someone makes them feel better.
Four months ago, the bottom was very clearly in sight. I am a middle aged IT worker who had been out of work for around 18 months on and off.
Praise God I got the best job I have ever had. And I ain't leaving til I'm room temperature. Slowly I am getting rid of my debts. I can answer the phone now.
But it could have gone the other way. I will never take anything for granted again.
I agree, it seemed in recent past that a core group here would attack those mentioned in articles such as these regardless of the situation as just irresponsible, living above there means or just out right foolish.
Made me wonder what their motives were.
As this article conveys there are some, evidentially a lot who just get caught up in the tidal wave and due to loss of job, medical expenses and whatnot have no choice but seek the help of the courts.
While I agree that some do bring it on themselves they are mostly kids, young adults living well above their incomes, living on plastic so long as they can make that minimum payment.
My son was in college from 1986 - 1992. My crisis came as a result of a severe, disabling stroke on July 26, 2002 that left me nearly totally paralyzed. Only by the grace of God did I manage to recover. My recovery has been due as well a lot of hard work and sweat of my brow.
Long story short: I will not be filing a BK now or in the foreseeable future. But I know many, many people who at age 59 - 62 are just now seeing their children go off to college while their 401(k) programs are down over 50% in value. Most of these folks have another twenty years to pay off their mortgage because they opted to refinance their homes to pay cash for new cars and pay-off their credit cards. My personal belief is the stock market will get worse before it gets much stronger.
Better to invest in real estate carefully than to gamble on stocks in publically traded companies. Too many games and sick game players out there in the real world.
You want it, you got it.
F' em.
You say they are forced to "Pay their mortgages AND Support their parents AND Put kids through college AND Save for their own retirement.
WRONG.
First, the baby boomers have often had two sets of kids. They had a first set, divorced, and had a trophy set on a second go-around. That's their own damn fault. They can't pay for two college bills, they shouldn't squirt out pups twice.
Second, boomers have generally come along at the right time for every major economic boom. They aren't having hiring issues. They can't be LEGALLY discriminated against, since most of them are 55+ now. And the generation that had its whims catered to since birth usually whines early about stuff like that and sues at the drop of a hat, so if there was this rampant discrimination, we'd see filings willy-nilly. They are in fact KEEPING their jobs later and more than any other generation before them, not being fired but RETAINED, holding up generational turnover and challenging mandatory retirement ages so that they can pad the minimal retirement savings they've amassed, which usually ain't much.
Third, I don't believe the issue is that they're too OLD, but that they are shitty employees. The boomers are undertalented and overcompensated in almost every situation where I've worked with them. The exceptions are almost always situations where they are running their own business, which is definitely NOT a boomer characteristic across the board.
Finally, re: "Support their parents AND Put kids through college AND Save for their own retirement," you assume they're DOING all that. Most aren't doing the former or the latter, instead expecting the government to do it. And boomer are paying their kids' way to a far lesser extent than their parents and the government did them, because they simply don't care about their kids the way their parents did, having been coddled and spoiled by the so-called 'greatest generation.'
On a side note, no surprise a boomer like Brokaw would suck up to his parents that way, after spending a lifetime having them grease his way, he figures out a way to make kissing their ass pay for him (write a book and 8 sequels--Chicken Soup for the Greatest Generation comes out this fall) without actually doing ANYTHING for them. And they love him for it MORE, and buy his book like it's their own biography! It makes me pro-euthanasia.
But back to the point I was working to: if baby boomers are bankrupt, it's because they did what they've always done. They racked up personal debt preening and babying themselves. And now they expect everyone else to take care of the debt, so they declare bankruptcy.
F them. I hope they all have judges who toss them in jail for contempt after they spend their court-mandated stipends on beer and broads and Viagra.
I'm in substantial debt myself, and occasionally I miss a payment and go into default. But if there was a possibility I could throw every one of them into debtors' prison, I would. I've heard boomer 'loser' statements a thousand times about people in student loan debt in my generation, even people who are working multiple jobs like I have to pay back those debts. I promise you, were there a debtors' prison, I might be following the boomers into it. But at least I'd know the bastards who took our country down were locked up where they belonged and would die there.
I chat with people all the time who go on and on about how they love being morgaged to the hilt, how the are so leveraged. And I laugh.
But consider also, that this same group were the ones who were called Yuppies back in the 1980s. All that glitzy living and style comes with a price. People have more material stuff and buy more toys than they did 50 years ago. It's a completely different mindset, and largely, it is the Boomers who popularized it.
RE: "I am graced to be debt free. I don't have all the gadgets and doo-dads I want but I owe no one nothing except of course the tribute I pay to the government for the privilege of living in my house." And you my friend, have mastered to key to TRUE freedom! Welcome to the club!
Too much partying did it too 'em.
Boomers created the economic booms of the last decade.
_____________________________
"most of them are 55+ now"
Boomer ages...40-58.
______________________________________________
"a boomer like Brokaw"
Tom Brokaw, 64 years old, not a boomer.
_____________________________________________
"I'm in substantial debt myself, and occasionally I miss a payment and go into default."
Grow up and learn to handle money like an adult, that way you won't have to go into default, which indicates a poor character development.....I'll buy this now thank you, but I might go into default and stick you with a write-off....oops, my bad....
Default = not gonna pay = deadbeat....and a foul-mouthed whiner.....your folks must be real proud.
Thank you for your wisdom. Into the fires of Gehenna with the irresponsible, selfish, and greedy Baby Boomers!
Ok...personal pet peeve here.
One does not file for bankruptcy. One files for bankruptcy protection.
Bankruptcy shows up fine by itself. One need not file an application for it.
I'm debt-free except for my mortgage which I have on a 10 year contract. And, I'm ahead of the schedule on that. The best gift I've ever given myself in this world was to cut up my credit cards a few years ago. I know there are catastrophe's in life, but a job loss is much easier to deal with when you have 12 months expenses in the bank, and no debt. Also, although I'm in IT, I can do anything, I can weld, I can do carpentry, I can sell, I can milk cows. I don't know how someone can lose a job and remain TOTALLY unemployed for months on end. There's always some kind of work if one doesn't let one's ego get in the way of common sense.
Free market bump!
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