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Rising debt plaguing seniors’ Golden Years

Hanah Cho | 6/13/2012, 9:39 a.m.

One illness or emergency can throw a senior into debt, White said.

“If everything goes perfectly, they could manage,” she said. “If something goes wrong, something unexpected happens, they don’t have the liquidity to move on.”

While recent government data shows declining consumer debt as families cut back on spending and saved more money, not all older Americans can follow suit. Not only are most older Americans past their prime earning years, but many must dip into their savings to stay on top of bills — while those still working may make less than they did in previous years.

Low-income seniors with excessive debt are having a hard time digging out in an environment in which “job growth is slow and salary increases are minimal,” said Craig Copeland, a senior research associate at EBRI, who wrote the study on debt among elders.

David Jones, president of the Association of Independent Consumer Credit Counseling Agencies, said debtors age 60 and older now represent the fastest-growing segment seeking help at member offices across the country.

The trend has been especially evident in the last two years, a period in which the eldest of the boomers began retiring, Jones said.

“There were a lot of people in this population that decided to retire without the same kind of assets that previous retirees had,” he said. “In fact, we began to see people with $60,000 in non-mortgage debt.”

In general, the association said, the average client at its nonprofit local credit counseling agencies has gotten older: 44.5 in 2011 versus 41 in 2007. The average client also was middle class and seeking help for reasons such as a job loss, reflecting the aftermath of the financial crisis, Jones said.

Although some older Americans are able to delay retirement, not all can. Unable to find work or other sources of money, many seniors can’t manage their debt on a fixed income.

“These people don’t have the same options that others do,” Jones said. “They can’t in many cases find a job, and if they do, they have to work at a job at a lot less money than they’re used to.”

Louise Carwell, a lawyer who works with low-income seniors at the Maryland Legal Aid’s consumer law unit in Baltimore, said her clients are dealing with a wide range of debt, from credit cards to medical bills.

Many seniors in Baltimore also are behind on property taxes, which puts their homes at risk of going to a tax sale.

Carwell and other public-sector attorneys who work with elders say indebted seniors want relief, a trend that has increased in the last several years.

“The anxiety that they get or they create within themselves from debt collectors, that’s really punishing,” Carwell said. “That’s why a lot of my folks file for bankruptcy.”

Seniors are fastest-growing bankruptcy group

Bankruptcy filings among seniors have risen markedly in recent years, according to recent studies. In general, the median age of people filing for bankruptcy has risen, to age 43 in 2007 from 36.5 in 1991, according to research by John A. E. Pottow, a law professor at the University of Michigan.