Study Reveals Bankruptcy Causes for Seniors

Seniors are vulnerable to bankruptcy, and a recent Stetson University College of Law study finds more senior bankruptcies are caused by everyday financial decisions, not a single event.

Stetson Law professors Theresa Pulley Radwan and Rebecca Morgan conducted the study (download PDF of article), which was published as the lead article this spring in the Georgetown Journal on Poverty Law and Policy.

“While prior studies of the general bankruptcy population have found that bankruptcies are often caused by one significant or traumatic financial event in the debtor’s life, the elderly seem to be living in a more fragile economic state every day,” said Radwan, an expert in bankruptcy law.

At a time when legislators are debating the issues of healthcare, credit card debt and unemployment, the new study by professors Radwan and Morgan examines the reasons why people fall into debt or choose the “last resort” of bankruptcy.

The study identified the following financial threats to the nation’s elderly among those surveyed:

  • General credit card debt used to pay for basic necessities far outweighed medical debt.
  • Bankruptcies were caused by a combination of low income and the high expenses of everyday living rather than by a single financially catastrophic event.
  • Social Security and Medicare failed to prevent the financial downfall of debtors.

The people surveyed for the Stetson study filed for bankruptcy between 2006-2008, with 102 Florida debtors responding. Of those who returned surveys, 96.9% were elderly or nearly elderly at the time. Sixteen attorneys representing debtors also returned surveys about bankruptcy among the elderly.

“As other studies have suggested for the elderly in general, Social Security and Medicare have critical roles in the financial life of the elderly,” Radwan said. “Almost every debtor in our study had both and, while many also had other sources of income and medical insurance, these other sources were insignificant and could not prevent the financial downfall of the debtors.”

Stetson University College of Law is home to the nation’s first elder-friendly courtroom, spearheaded to be a model for accessibility. Stetson’s Elder Consumer Protection Program provides information to seniors about how to better protect themselves from becoming the victims of financial scams, through public workshops and materials.

Contact Brandi Palmer
Manager of Media Relations