Attorney Dale C. Roberson attended the Connecticut Bar Association, Annual Connecticut Bankruptcy Conference, on October 4th, 2018, at Water’s Edge Resort and Spa, in Westbrook, Connecticut. The seminar was a full day of discussing bankruptcy issues involving; new Local Bankruptcy Rules, trends in Consumer Bankruptcy, Article 9 Sales, Chapter 13 Updates, Individual Chapter 11 Bankruptcy, Not-for- Profit Insolvencies and Legal Ethics. Several bankruptcy judges attended this conference, including, Honorable Julie A. Manning, Honorable Ann M. Nevins and Honorable James J. Tancredi. The event was attended by approximately 150 members for the Connecticut Bar Association. Attorney Roberson has practiced in the bankruptcy field for over 35 years.
Associate Professor Deborah Thorne, of the University of Idaho, was a featured speaker on the subject of Consumer Bankruptcy. For two decades, Professor Thorne has studied the economic inequality of consumer bankruptcy. Professor Throne made many observations and predictions as part of her presentation. In years past, Medicare coverage was adequate and out-of-pocket expenses were approximately 12% of income. Defined benefit plans paid 62% of income and post- retirement health insurance was very common. Consistently, the leading causes of bankruptcy are job loss (decline in income) and excessive medical expenses. Households can typically struggle for years in a “sweatbox” before they file bankruptcy. Bankruptcy is not a low socioeconomic status phenomenon; chapter 7 filers are mostly homeowners with some college background. Chronic issues include: inadequate income, health struggles, and being older; which make a fresh financial start unlikely. A situation now exists in the United States, whereby “a myriad of risks that were once managed and pooled by government and private corporations have been shifted onto individuals and families”. Defined benefit plans now pay 17% of income and have been replaced with Defined Contribution plans and investment decisions left to individuals. Full retirement age for Social Security has increased to 70. Inadequate coverage from Medicare, which out-of-pocket expenses has increased to 20% of income. Employers are dropping retirees’ post- retirement healthcare. Given these shifts, increase in future elder filings are predictable.
Implications of the risk shifts for older Americans: The wealth of older Americans is being stripped. At the time of their bankruptcies, older Americans had negative wealth of $17,390. Many Americans have emptied their retirement accounts to repay their debts. The wealth that should have been there to sustain retirees until they die is gone; their wealth has been transferred to the health care industry and the lending industry.
Elder bankruptcy should be rare. The projected increases, which will disproportionately affect single senior women are a result of governmental and business policy changes. Will our government pass legislation to mitigate these future bankruptcies from happening?