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Five things baby boomers should know about bankruptcy

Bankruptcy is huge, no matter your age, but it's arguably more important as you grow older. You have less time to deal financially with your debt before retirement, and you must know all of your options. This is becoming more relevant for baby boomers, and here are five key things this generation needs to know.

Out of all age groups, bankruptcy is highest among baby boomers

Baby boomers, in particular, are using bankruptcy more often than other age brackets, and they have been for about a decade. This generation is used to being heavily represented in a lot of ways because of the population spike that provides its nickname, and studies have found they are over-represented in bankruptcy filings. One such study that came out in 2010 showed that 42 percent of all filings came from baby boomers.

Bankruptcy is growing even more common

That same study showed that the number of filings was climbing dramatically. In a five-year span, it jumped by 65 percent for baby boomers. Not only were they the most likely to declare bankruptcy, but it was getting more likely by the year.

Baby boomer debt is soaring

As you may expect, a huge reason for the bankruptcy trend is that debt itself is skyrocketing for those between 50 and 80 years of age. A report by the Federal Reserve Bank of New York called "The Graying of American Debt" discovered that it had jumped in just a little over a decade by a stunning 60 percent. This means that debt is increasing far faster than inflation or other outside financial forces.

Median household net worth can fall with age

The Center for Economic and Policy Research did a study and found that between 2004 and 2009, median household net worth dropped by 45 percent for those between the ages of 45 and 54. The study also found that median net worth fell by 50 percent for those 55 to 64 years old.

Debt is falling for younger people

Baby boomers may be tempted to assume that debt has risen for everyone, but that's simply not the case. The "Graying of American Debt" report showed that those who were 39 years old in 2015 had 12 percent less aggregate debt than those who were 39 in 2003. At the same time, those who were 67 in 2015 had 169 percent more debt than those who were 67 in 2003!

The numbers aren't even close. Debt among baby boomers can't be ignored, especially as retirement draws near. It's crucial that those facing mounting debt know what their options are. Bankruptcy can be very helpful in some situations, whether using Chapter 7 to liquidate assets and get a fresh start or using Chapter 13 to reorganize debt and make what is already owed affordable. Don't ignore these options, and be sure to fully investigate which is right for you in your unique financial situation. 

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