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Older Americans in Bankruptcy--The First Paper Out of the Consumer Bankruptcy Project

posted by Bob Lawless

Many of us on Credit Slips are part of the Consumer Bankruptcy Project (CBP), a multidisciplinary research initiative. This week, many of you probably saw the press coverage for the first paper published out of the CBP data: Generations of Struggle by Deborah Thorne, Elizabeth Warren, and Teresa A. Sullivan. This paper's reports three key findings. Since 1991--

  • Americans age 55 or older have experienced the sharpest increase in bankruptcy filings.
  • Americans age 34 or younger have experienced the greatest decrease in bankruptcy filings.
  • The influence of Baby Boomers on bankruptcy filings has moderated substantially.

A full copy of the paper is available from the AARP here. The paper shows that older Americans are under greater financial stress than ever before. I am sure we will have more to say about this paper here on Credit Slips.

Because the courts do not collect any basic demographic data about who files bankruptcy, this sort of information would not be available without interdisciplinary research teams like the CBP and the organizations who generously support our research (the AARP, the Robert Wood Johnson Foundation, the Federal Deposit Insurance Corporation, and research funds at the University of Michigan and Harvard University). The data collection for the CBP is complete, and we will keep announcing the availability of new papers here on Credit Slips. What exactly, however, is the CBP?

The CBP is comprised of ten researchers in the fields of law, sociology, and medicine at seven major United States research universities:

  • Dr. David Himmelstein, Harvard Medical School
  • Prof. Melissa Jacoby, University of North Carolina
  • Prof. Robert Lawless, University of Illinois
  • Prof. Angie Littwin, University of Texas
  • Prof. John Pottow, University of Michigan
  • Prof. Katherine Porter, University of Iowa
  • Prof. Teresa A. Sullivan, University of Michigan
  • Prof. Deborah Thorne, Ohio University
  • Prof. Elizabeth Warren, Harvard University
  • Dr. Steffie Woolhandler, Harvard Medical School

We collaborated to collect data for over 2,700 persons who filed bankruptcy in the first part of 2007, and this 2007 cohort builds on cohorts from 1981, 1991, and 2001. The data come not only from the court records from each bankruptcy but also written questionnaires and telephone interviews our respondents were kind enough to send to us. This kind of research cannot take place without the help and cooperation of persons selected to take part in the study, and they all deserve credit for trying to help improve our legal and financial systems for others. All together, the 2007 cohort of the CBP has over 2,000,000 individual datapoints to help us understand why individuals come to find themselves in bankruptcy court and how we can improve the system.

As I wrote, CBP members are just beginning to write the papers that will be published out of these data. Although the data collection was a collaborative effort, the different members of the research team will be writing their own papers within their own areas of interest and expertise. Generations of Struggle is the first paper and has three CBP members as co-authors. Look for more papers on medical debt, the self-employed, the effects of the 2005 changes in the bankruptcy law, sociological perspectives about the bankrupt, rural debtors, elderly debtors, the effect of bankruptcy on family dynamics, and many more topics.


I wonder if the data would change if you defined elderly as 65 and up, rather than 55. I suspect that older people not quite old enough for Medicare are highly at risk of bankruptcy if their insurance won't cover an illness.

To Anon: What insurance? At one job, the insurance cards arrived with the pink slip that ended the benefit as well as the income. No performance issue - the manager stated he had just changed his mind. Family COBRA eats at least 60% of unemployment benefits. Duh, of course the data would be arranged differently. Nevertheless, the political and social policies that continue to reward the rich and disenfranchise the Middle and Lower Class continue unabated and will bring still more people to this sad experience.

To Ms. Warren: You need to study IT consulting firms that sign on workers for termed contracts. You surely must know that there is no contract with the worker that supplies the labor, W2 or 1099; no difference. That is, of course "at will", and when the client ends the gig in two months by bringing in foreign workers, changes their mind about the direction of the project, or when the consulting firm itself decides to change their focus, the worker gets nothing while the consulting firm has insured against this loss of income or has charged the client a fee in anticipation of the clients' failure to complete that contract in addition to the commission paid for the consulting firms' head-hunting efforts. Not one has ever called back for a new opportunity though they were sure the worker did a great job as their "slave" on their last contract. It's my feeling that often times a favorite recruiter colludes to split that placement commission with a preferred client account just for the commission. What else could be worth going through all the motions, interviews, benefits sign up, etc...and a pink slip even before one is up to speed in a complicated task. What a waste for all except for the corrupt colluders.

Serial unemployment kills the individual spirit, ruins marriages and relationships, and can destablize a whole neighborhood.

In my opinion, it causes a type of PTSD, not unlike that experienced by susceptible soldiers. It is a battle of survival, but bankruptcy does not necessarily reflect the failure of the worker to adapt over and over and over again. Though it creates and funds no jobs, government still holds substantial debt over the head of bankrupted individuals. One should not be penalized so harshly when there is no worker performance issues. Once again the execs escape responsibility, but the worker who makes the corporate product, services the corporations demands to provide better(?-a euphemism for raising prices or a new fee) service their customers lose their source of income, their homes, their savings, their healthcare, and eventually the stress takes their health and kills, so regularly.

One may claim a modest to high annual salary only two months of the year though the job was contracted for the next six months, followed by 10 months hunting down the next job. It's like riding the end of the dragon's tail. Try paying a mortgage or even signing a lease on those terms! The three-month rainy day fund isn't nearly enough; just try to replenish it on those terms. Try recovering from bankruptcy on those terms.

Another thing: when your vote is compromised, your voice is silenced, but should you speak out, be sure you're wrapped in a Faraday cage, because your phone, your computer, your life is being monitored and controlled.

So, Dr. Warren, while this may provoke discussion, will it really bring about change or will it just provide more marketing demographics that the CEOs can manipulate to mortally wound the "average" American citizen and freeze out the charity of those yet untouched?

I see a lot of contract workers treated that way. The most common example is the "hot shot" truck driver but I have seen certain nurses working for home health care providers face that same situation. COBRA is a killer! The ones who it is a big deal to are the ones with chronic health issues. Jobs with numerous deadlines eat the lion’s share of that demographic.

My father in law worked for a local refinery for like 30 years, then all of a sudden they tell him "take their offer" or he will be let go. Just by "coincidence" he was just 2 years shy of being able to claim retirement. Did they down size? No. They hired new blood and saved a ton on their contributions to health care and retirement funds. He is one of those "Baby Boomers". He saved and came home with just enough to make bills all of those years, just so he could retire comfortably. Instead he had to go find work and file for Chapter 13. He is a fighter some though have fought all of their lives to get to where they are just to see it slip away. He was able to find great employment after 2 years of searching and now back on pace to make that retirement.

I agree Chapter 13s are tough when someone is bounced around from contract to contract or only called in when there is work. In those kinds of jobs, when it is good it is really good but when it takes a turn the other way, it is really bad. It is tough out there. I get to see it every day. It seems that we have to have a certain mind set.

Story my uncle told me when we were hunting:

He was hunting on a friends’ ranch and his friend asked him if he wanted to go horse riding. He accepted his friend invitation without hesitation. The horse he was given though had, well lets just say had a attitude problem. The problem: The darn thing would not turn! The horse would go strait just fine but when directed to turn, he just would not. The horse began to gallop. Faster and faster… The horse would not stop either! A huge patch of “monte” (brush) was ahead of him. My uncle pulled one side of the reigns’ the horse turned its head but stubbornly would not veer off of his “straight” path! Long story short, my uncle had to bail!

Sometimes the horse we are riding is not going in the direction we want. Sometimes we have to bail and start over. Usually it’s painful but necessary. Or we can be like that horse. When life tries to turn us, we can tilt our head and push on.

Our entire economic system is FUBAR: Fouled Up Beyond Any Recovery. Of course this was a term commonly used by systems analysts to describe a application that had been patched a few too many times. So what we really need is a "needs based" analysis of the economy in terms of providing adequate "food, clothing and shelter" to "We the People." Economics is too often just another flawed belief system.

I suggest very radical change. We need a 10-year moritorium on all home foreclosures (American Citizens Only) while we ferret out the crooks . . . and there are many. Since the inception of the Federal Reserve (1913) the American people have been swindled.

I am a proponent of implementing the "New Agenda for America" in order to move us towards the Commonwealth that our founding fathers had originally envisoned.

Bruce W. Cain
Editor, New Age Citizen


Overview of the "New Agenda for America"

For anyone new to my website (newagecitizen.com), the following links are crucial for understanding the NAC's positions on various socio-economic issues. These positions are now "planks" of the "New Agenda for America." I am encouraging people to take the "New Agenda for America" viral during the year preceding the 2008 Presidential Election (November 2008). The fact of the matter is that none of the Democratic and Republican candidates have any intention of truly representing the American Working Class when it comes to issues such as Health Care, Enforcing the Immigration Laws, Re-Legalizing Marijuana for Adults etc. While none of the following links articulate NAC's complete arguments they provide new activists with a foundation of the more important concepts and rationals underlying the "New Agenda for America."

The best introduction to the "New Agenda for America" is in the recently released (11/30/2007) video (below):

The "New Agenda for America" and the 2008 Presidency

For more information on the "New Agenda for America"


NEW AGENDA FOR AMERICA: Preliminary Planks
Help Influence the 2008 Presidency
[More info: http://www.newagecitizen.com and click on topic]
[Video: http://www.newagecitizen.com/NAA.htm]

(1) Universal Health Care for All American Citizens
(2) A 20-year moratorium on all immigration into the United States
(3) Legal Marijuana for all Adults and Medical Patients
(4) An immediate reversal to the Offshoring and Inshoring of American Jobs
(5) A strict enforcement on issues of Separation of Church and State
(6) An immediate move from so-called Free Trade Agreements to Bilateral Trade agreements
(7) A major R&D project to bring energy independence to the United States and the World through recycling, reuse, ending hyper-consumerism and investing in the development of sustainable energy sources (e.g., solar, photovoltaic, wind, geothermal)
(8) No further ownership of US Assets (businesses, homes, ports, stock exchanges) by foreign governments or individuals!
(9) Replace the Federal Reserve with a People's Reserve which allows public oversight
(10) Absolute support for Net Neutrality

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  • As a public service, the University of Illinois College of Law operates Bankr-L, an e-mail list on which bankruptcy professionals can exchange information. Bankr-L is administered by one of the Credit Slips bloggers, Professor Robert M. Lawless of the University of Illinois. Although Bankr-L is a free service, membership is limited only to persons with a professional connection to the bankruptcy field (e.g., lawyer, accountant, academic, judge). To request a subscription on Bankr-L, click here to visit the page for the list and then click on the link for "Subscribe." After completing the information there, please also send an e-mail to Professor Lawless (rlawless@illinois.edu) with a short description of your professional connection to bankruptcy. A link to a URL with a professional bio or other identifying information would be great.