Only last week, seniors got good news: social security benefits are set to go up 5.8% in 2009. The last time there was an increase that large was before I started my Indiana bankruptcy law practice almost twenty-five years ago! Interesting – back then people thought bankruptcy and foreclosure were things that had little to do with seniors. Today, the story’s different.

A new AARP study using data from credit bureau Experian shows homeowners age fifty and up represent almost 30% of delinquencies and foreclosures. The National Consumer Bankruptcy Project reports that bankruptcy is becoming much more common among the elderly. Fifteen years ago, 8% of bankruptcy filers were 55 or older; now the number’s closer to 25%. Sadder still, bankruptcies are up 125% among those aged 65-74, and 433% for ages 75 and older. Why is this happening? Almost half of older Americans carry debt, and on a fixed income, many have a hard time keeping up with debt payments at a time when fuel and food costs are rising. Parents may have helped children who’d been laid off jobs, only to find they were having trouble managing their own finances. Medical costs not covered by insurance play a very big role here as well.

Fortunately, federal law makes social security benefits exempt from creditors’ claims, including bankruptcy trustees. Even creditors who’ve obtained judgment can’t intercept social security payments – or get to that money after it’s been paid. Perhaps that extra $750 a year from social security won’t solve all the problems, but, as they say, every little bit helps.