New Group Swells Bankruptcy Court: The Middle-Aged
MOUNTAIN VIEW, Calif. -- On a Wednesday afternoon, Jeff Hester stood at the entrance of an empty jewelry store, gazing over his bifocals into the sunny parking lot. He watched cars drive by. He played with the change in his pocket. After a few minutes, he headed back into the store to clean its glass display cases.
A college-educated former computer-systems operator, Mr. Hester now sells moderately priced jewelry in a mall. He is a member of an emerging class of middle-age, white-collar Americans who make the grim odyssey from comfortable circumstances to going broke. Mr. Hester, who filed for bankruptcy last year, puts it succinctly: "I'm 59 and I don't have any money."
Since the 1960s, personal bankruptcy has often been a haven for the young and struggling. Bankruptcy lawyers say younger and less-educated people tended to rack up too much debt while starting families and jobs, without a savings cushion to carry them through lean times. No government agency tracks the age of bankruptcy filers, but the rule of thumb, say those who've worked in and studied the field, was the older the group, the fewer the filers.
That's changing, as personal bankruptcy filings are hitting all-time highs. Last year, there were more than 1.6 million such filings, compared with 875,000 a decade earlier. Some experts say much of the increase is being driven by older people, many of whom have decades of work experience in white-collar jobs.
The Consumer Bankruptcy Project, which surveyed 2,400 bankruptcy filers in 2001 and 1991, found that on a per capita basis, older people are now the most likely to file. In 2001, for instance, per capita filings of individuals ages 45 to 54 increased 58%, to 11 per thousand, according to the study. "The curve is moving to the right," says Elizabeth Warren, a professor at Harvard University Law School, who co-authored the study. "It reflects a more frightening reality for a wide swath of middle-class America."
Many of today's bankrupt baby boomers simply weren't as frugal as their Depression-era parents. But the increase in middle-age people filing for bankruptcy also is attributed to soaring medical costs, an unstable job market and years of aggressive credit-card marketing.
Increased family obligations play a role too, says Ms. Warren. The so-called sandwich generation often bears financial responsibility for both their children and their parents. Because people are living longer, middle-age Americans are now eight times as likely to have a living parent as previous generations, she says. And since many people waited to have children later in life, tuition bills come later as well.
Ben B. Floyd, a personal-bankruptcy trustee in Houston for the past 30 years, says he's now seeing people "who obviously had a white-collar background. They come in looking lost." Personal-bankruptcy lawyers across the country say they've witnessed a tidal shift in their practices, seeing older clients with longer work histories. "These people didn't take their credit cards to Atlantic City," says Gabriel Del Virginia, a New York bankruptcy attorney. "It's largely because people lost their jobs or had a catastrophic illness."
Until last year, Charlene Freeman, a 48-year-old who lives in the Boston area, worked at home, doing technical writing on a contract basis. As the family's primary breadwinner, she says she was earning $150,000 a year, had a perfect credit record and a spacious home with a pool. Her husband is an independent computer technician.
Then, her long-controlled kidney disease turned into kidney failure, halting her income while her medical costs soared. Although she paid $725 a month to insure herself, her husband and child, Ms. Freedman wasn't insured for the numerous drugs prescribed to her. Those costs at one point rose to $1,200 a month. The drug costs are on top of her usual $4,000-a-month outlay for mortgage, groceries, utilities and other expenses.
Although Ms. Freeman has disability insurance, it wouldn't cover anything related to kidney problems because it was a pre-existing condition.
To pay the bills while she battled her illness, Ms. Freeman drained the couple's retirement savings, her home-equity line, and tapped her young son's savings accounts. She used 10 credit cards. What she didn't realize, she says, is that her husband was using checks sent to them by credit-card companies. These checks, sent unsolicited, have no grace period; interest begins to accumulate on them as soon as they hit the cardholder's account.
In May, when her husband went out of town for a job, Ms. Freeman asked for the checkbook so she could pay the monthly expenses. Shocked at the size of their credit-card bills, Ms. Freeman decided to look up the couple's accounts online and add up exactly how much they owed. As her mouse clicked through the pages, Ms. Freeman says her eyes filled with tears. The couple had accumulated $115,000 in debt. "I sat there and said 'I'm s-d,' " she says. She plans to file for bankruptcy in the fall. "It's killing me to file," she says. "But there's no way I can make enough to pay it off."
Her husband, Jim, says he didn't tell his wife he was using the credit-card checks because he didn't want to upset her while she was ill. "I was always banking on that next big job to come in to pay for it, but it never came," he says.
More Aggressive
In recent years, the credit-card industry has grown increasingly aggressive in raising interest rates for certain consumers. Interest rates can go up when a person's payments are late, or when their total debt passes a specific level.
Six months ago, Ms. Freeman realized Bank of America had raised her interest rate on its card, citing the total debt her family owed. Other credit-card issuers soon followed suit. She called a few of the banks, and pointed out her prior creditworthiness, but requests to have her rate lowered were denied, she says.
While she's cutting back -- returning the cable box to save $20 a month, keeping the air conditioning turned off -- Ms. Freeman says she's given up hope of paying the credit cards back in full. Today, nine of her 10 credit cards, which she says previously charged interest rates in the 11% range, are charging her rates of 25.9%. Then there are the late fees, which she says are as high as $285 a month.
Over the last six months, she estimates her family racked up $19,000 in new expenses. Ms. Freeman says her attorney has advised her not to file for bankruptcy for three months because he fears she could be accused of racking up debts she knew she couldn't pay. Ms. Freeman says she isn't using credit cards any more.
The number of credit-card solicitations in the U.S. grew to 4.29 billion in 2003, from 1.52 billion a decade earlier, according to Chicago research-firm Synovate Inc.'s Mail Monitor service. Last year, Federal Reserve data showed total revolving consumer debt at more than $734.1 billion, compared with $238.6 billion in 1990.
Mounting credit-card debt led Mark Taylor, 43, to file for bankruptcy early last year. After losing his job as a community-relations executive at a hospital seven years ago, he started doing consulting work. But as the economy slumped, he says his work dried up, and he began increasingly relying on credit cards.
Since filing for bankruptcy, he says he has tried to shun credit, keeping a card only to rent cars. Learning to be debt-free "is a liberation I can't even begin to describe," says Mr. Taylor, who is now working as a legal assistant at a New York law firm.
For Mr. Hester, who is now selling jewelry in the mall, bankruptcy is the culmination of a tumultuous decade. In 1991, after being let go by his longtime employer in the airline food-service business, and in a failing marriage, Mr. Hester says he became addicted to cocaine. He battled that for the next five years, he says, until he entered rehab and conquered his habit in 1996. Friends and family say he's been drug-free ever since. The period drained him of his savings.
Dream Job
In 1999, after several years working at a Silicon Valley electronics-parts maker, Mr. Hester landed his dream job: setting up and maintaining computer systems at Finisar Corp., a fiber-optics startup. On Dec. 20, five days after he and his second wife, Carol, bought a modest home in San Jose, Finisar launched its initial public offering. Mr. Hester suddenly had stock valued at $250,000.
While the couple spent some of that money on decorating their new house, much of their newfound wealth went to their extended families. The couple paid $5,000 for the funeral of Ms. Hester's mother and $8,000 to move her father to a new home. Mr. Hester began using the new money to try to reconnect with his children, with whom he had lost touch after his divorce. He gave his grown son $60,000 to pay for college. He gave his daughter $10,000 for her wedding and $3,000 to renovate her kitchen. "I felt obligated to pay up because I hadn't been a part of their lives," Mr. Hester says.
In May of 2002, after surviving several rounds of layoffs, Mr. Hester was laid off, for economic reasons, the company says. Convinced he could get another job quickly, he sent out hundreds of resumes -- but received little response. He cashed out the $10,000 he had in his Finisar 401(k) plan to pay living expenses and sold off his Finisar shares, which had sunk to around $10 each, from a peak price of $58 a share.
In November 2002, Mr. Hester threw in the towel on tech. He took a retail job, with a chain that sells low-priced jewelry. "I was selling credit to people who couldn't feed their kids," says Mr. Hester, who declines to name the retailer. "I knew they'd lend them the money, and I knew they would beat them up if they were a minute late."
He could identify with that feeling. By December of 2002, bill collectors had begun calling him, demanding to know when the next payment would be in the mail. He screened calls to avoid them. He sold possessions to pay bills and became withdrawn, his wife says. Over the holidays, the couple totaled their bills, found they owed nearly $40,000, and decided there was no way to pay them back.
In January 2003, Mr. Hester went to work at the jewelry store as usual. He says he had trouble doing the routines of checking inventory and making change for a customer. A doctor eventually prescribed antidepressants. The next month, the Hesters went to see an attorney, who filed for bankruptcy protection on the Hesters' behalf six weeks later.
Like the Hesters, middle-age filers, many of whom are homeowners, often try to pay down their credit-card bills by taking equity out of their homes, bankruptcy lawyers say. But that strategy can backfire. In a personal bankruptcy filing, credit-card debts and other unsecured debts are wiped out. Home-mortgage payments aren't.
Middle-age filers also frequently cash out their retirement plans, even though retirement plans are protected in bankruptcy. Bankruptcy attorneys say that's the most common mistake older bankruptcy filers make.
The downsides of bankruptcy vary from state to state. In some, filers can risk losing their homes. Credit reports list bankruptcy filings for seven to ten years. Congress has gotten close to passing legislation in recent years that would make it much more difficult for many individuals to file bankruptcy, but those efforts have failed.
"The older people stall," says Ron Wilcox, a bankruptcy attorney in San Jose, Calif. "By the time someone gets to my door they've considered every other possibility to get out of this, and drag their feet for years while the debts accumulate higher and higher."
Ignoring the pleadings of his friends, Barry O'Neal says he carried his credit-card debts for 10 years. "I felt there was an ethical question here," says Mr. O'Neal, 62-year-old director of the concert-music division for New York-based music publisher Carl Fischer. "Here are these debts I acquired by spending [the credit-card provider's] money. I battled that for quite some time."
Mr. O'Neal's credit-card debts are rooted in the 1980s and 1990s, when he was paying for hospitalizations and therapy for a family member who had psychological problems. Many of the mental-health-care expenses weren't covered by insurance, he says. He also concedes he didn't reduce his lifestyle expenses during that time, attending concerts and dining out. "I was a little careless with my spending," he says. "It was very foolish."
Those debts never went away. Over the next decade, although Mr. O'Neal tried to make headway on paying off his bills, at one point borrowing against his life insurance to pay them down, he never got ahead. Five years ago, the bills crept past $25,000; by last year, it had passed $40,000.
"It becomes more and more of a treadmill," says Mr. O'Neal, who now makes $50,000 a year. "I realized I wasn't keeping up; only falling farther behind."
Last year, Mr. O'Neal finally gave up and filed for bankruptcy -- after an attorney friend offered to underwrite the cost of the filing.
美国中年人成破产大军主力
这是一个周三的下午，杰夫?海斯特(Jeff Hester)站在他的珠宝店门口，店里空无一人。海斯特的目光透过他那副远、近视双焦距眼镜盯著洒满阳光的停车场，看著路上的车辆从那里经过，却没有人停下来。他随手拨弄著口袋里的零钱。几分钟后，他转身回到店里，开始擦拭陈列珠宝的玻璃柜。
早年大学毕业的海斯特曾是一名电脑系统操作员，现在，他在一家大型购物中心开了家销售中档珠宝的专卖店。他还是美国刚刚出现的一支特殊中年白领大军中的一员──他们正在从养尊处优滑向破产的道路上苦苦挣扎，对于他们的状况，海斯特自己概括得很简洁：我59岁了，并且身无分文。去年海斯特申请了破产。
自从上世纪六十年代以来，破产经常被视为年轻人和穷人的“专利”。破产律师说，年轻人和那些教育程度不高的人在成家和刚开始就业的时候经常会债台高筑，他们手头没有储蓄，很难靠自己度过那段贫困的日子。政府部门没有总结过破产申请人的年龄分布，而研究这类问题的私人机构表示，基本的规律是年龄越大的人群中，申请破产的人越少。
而现在，随著个人破产案达到创纪录水平，上述规律也发生了变化。去年，美国的个人破产申请超过了160万起，而十年前为875,000起。一些专家说，增加的这么多案例中，有很多当事人都是中年人，这些人中不乏有几十年工作经验的白领。
一项名为Consumer Bankruptcy Project的消费者破产情况调查计划显示，按照每千人中申请破产者的比例计算，中年人目前是不同年龄段中比例最大的。这项调查对1991年和2001年的个人破产案情况进行了调查对照。举例来说，2001年，45-54岁年龄段的美国人申请破产的比例为千分之十一，较10年前增长了58%。联合组织这次调查工作的哈佛大学法学院教授伊丽莎白?沃伦(Elizabeth Warren)说，整个曲线在向右移动。她说，这反映出一个严酷的事实，就是越来越多的美国中年人跨入了破产的行列。
这些战后婴儿潮时期出生的中年人的确有很多已不像他们曾经历过大萧条的父母亲那么俭朴了，但是，中年人破产比例增加还要归咎于医疗成本大幅增加、就业市场不稳定和信用卡消费势头加剧等因素。
沃伦说，家庭债务增多也起到了很大的负面作用。被称为“三明治一族”的中年人上有老、下有小，要承担两代人的财务负担。沃伦说，由于人们比以前更长寿了，现在美国中年人父母健在的比例是上几代人的8倍。同时，因为美国人的生育年龄也推迟了，他们的孩子需要支付学费的时间也推后了。
三十年来一直在休斯顿从事个人破产案托管服务的本?弗洛德(Ben B. Floyd)说，现在来委托业务的人明显都有白领背景。他们到事务所来的时候经常是一副失魂落魄的样子。
美国各地的个人破产代理律师都反映，他们注意到业务对象的变化，客户的年龄越来越大，工作经历越来越长。纽约破产代理律师加布里?代?弗吉尼亚(Gabriel Del Virginia)说，这些人并不是因为带著信用卡在大西洋城赌输掉以后破产的。他们主要是因为失业或是生了大病。
今年48的查伦?弗里曼(Charlene Freeman)就是这样一个例子。弗里曼住在波士顿一带，直到去年以前，她一直在家办公，主要是根据合同给人写些技术性文章。她说，那时她每年能挣15万美元，信用记录很好，拥有一处宽敞的带游泳池的房子。她的丈夫是一位自由职业电脑机师。
但是，有一天，她很久前已经治愈的肾病复发了，并且出现了衰竭，这样她不得不停止工作，而与此同时，她的医疗费却在直线上升。虽然她每月为她丈夫、孩子和她自己交725美元医疗保险，但仍有很多药医疗保险不能报销。这部分费用一度高达每个月1,200美元。在负担药费之外，她每个月通常还要为住房贷款、日杂用品、水电煤气和其他用项支出4,000美元的费用。
虽然弗里曼投了病残保险，但由于她是在投保前得的肾病，因此，与肾病有关的问题不在保险赔偿范围之内。
在对抗疾病的同时，弗里曼还要对付那些帐单，为此，她动用了夫妇两人的退休储蓄、住宅信用贷款和小儿子的教育储蓄帐户里的钱。她有10张信用卡，但她说，她一直不知道他的丈夫在用信用卡公司主动提供给他们的支票。这些支票没有免息期，也就是说，自支票划到持卡人帐户上后就立即开始计息。
今年5月的一天，弗里曼的丈夫为工作上的事去外地时，弗里曼跟他要下支票本以便支付各种月度费用。这一下，弗里曼被支票本记帐单上的数字惊呆了，她决定查查他们夫妇的网上帐户，算一下他们到底欠多少钱。弗里曼后来回忆说，当她用鼠标一页页点击页面的时候，她禁不住泪流满面。夫妻两人的债务已经达到了11.5万美元。当时她坐在那里，自言自语说：我是彻底毁了。她打算秋天的时候申请破产。她说，申请破产等于是自杀，但除此之外别无办法，因为她实在没有钱去偿还欠款。
弗里曼的丈夫吉姆?弗里曼(Jim Freeman)说，他之所以没告诉妻子他用信用卡支票的事，是因为他不想让她在生病的时候再为这事不安。他说：我总是期待下一次能接到份好差事，挣到足够的钱把欠帐还掉，但这样的好事一直没发生。
近年来，信用卡行业在针对某些消费者提高透支利率时变得越来越苛刻了。持卡人还款晚了利率就会上调，或者总的欠款额超过某个特定限度时利率也会上调。
6个月前，弗里曼获知美国银行(Bank of America)因为她全家的欠款总额过大，调高了她的信用卡透支利率。其他信用卡发卡机构不久也如法炮制。她说，她给好几家银行都打了电话，告诉他们她一向信用很好，希望能降低她的借款利率，但她的请求被回绝了。
弗里曼开始缩减开支，为此，她退回了有线电视接收盒，这样每月可节省20美元，空调也不用了，不过她说，她已经不指望能全额偿还信用卡欠款了。现在，她的10张信用卡有9张的利率是25.9%，而以前都是11%。另外，这些卡还要支付滞纳金，每个月高达285美元。
据她估计，在过去的6个月时间里，她全家又增加了19,000美元的各种费用。弗里曼的律师建议她，3个月内不要申请破产，因为他担心，贷款机构会指控她明知无力偿债还在大量透支。弗里曼说，她现在已不再用信用卡了。
根据芝加哥市场调研公司Synovate Inc.旗下的Mail Monitor提供的数据，2003年美国申请信用卡的数量增至42.9亿张，而10年前只有15.2亿张。去年，美国联邦储备委员会(Federal Reserve)数据显示，消费者循环债务总额超过7,341亿美元，而1990年只有2,386亿美元。
信用卡欠债不断增加，迫使43岁的马克?泰勒(Mark Taylor)去年申请破产。在一家医院担任社区关系主管7年后他丢掉了工作，开始从事咨询服务工作。但随著经济衰退，他说他的客户来源也开始枯竭，生活上越来越倚重信用卡了。
他说，申请破产以后，他尽力不使用信用卡。他把信用卡数量减少到一张，用来租车。用他的话说，“无债一身轻，这简直是我根本无法描述的一种解放。”泰勒目前在纽约一家律师事务所担任法律助理。
而对本文开头提到在珠宝店工作的海斯特来说，破产是这10年喧嚣生活的顶点。1991年前，他在一家航空食品服务公司工作了很久，但不幸在1991年被解职，同年离婚。他一蹶不振，吸食海洛因上了瘾。他说，接下来整整5年，他都在努力戒毒，直到1996年重新找到工作才彻底与海洛因告别。他的亲朋好友们说，从那以后他再也不吸毒了。但这段时间沉溺于毒品也耗尽了他的积蓄。
他在矽谷一家电子零部件生产企业工作了几年，到1999年终于找到了他梦想已久的工作：从事电脑系统配置和维修。这是一家名为Finisar Corp.的光纤初创企业。他和第二任妻子卡罗(Carol)在旧金山买了一桩简朴的住宅，短短5天后，也就是1999年12月20日，Finisar进行了首次公开募股。海斯特一夜之间就拥有了价值25万美元的公司股票。
夫妇俩从这笔新到手的财富中取出一部分，用来装修新家，但是大部分都给了家人。他们为海斯特夫人母亲的葬礼支付了5,000美元，另外8,000美元给海斯特夫人的父亲找了一处新房子。海斯特从离婚后就一直没和孩子们联系，现在他开始重新找到他们。为他已经长大成人的儿子，海斯特付了6万美元的大学学费，为女儿的婚礼他给了1万美元，另外3,000美元给女儿装修厨房。海斯特说，“我觉得我该付这些钱，因为在他们的生活中，有段时间我不在。”
可是2002年5月，熬过了好几轮裁员后，海斯特还被迫离职。公司的理由是经济不景气。他相信自己很快能再找一份工作，发出了数百份求职简历，但几乎毫无效果。为了维持生活，他把自己在Finisar 401(K)帐户上的1万美元折成现金取出来，还卖掉了自己持有的Finisar股票。不过，公司股票已经从高峰期的58美元降到了10美元一股。
2002年11月，对找到一份科技公司的工作终于绝望后，海斯特在一家低价珠宝连锁店找了一份零售的活儿，但不愿意说出这家连锁店的名字。他说，“我向那些甚至养活不了自己孩子的客户推销信贷付款。”海斯特说，“我知道他们（信用卡公司）会借钱给客户，我也知道一旦他们（客户）还债晚了一分钟，他们（信用卡公司）就会毫不留情地敲打。”
对此他有亲身体验。2002年12月，帐单公司开始给他打电话，发邮件，询问何时他才能偿付下一笔款项。他不得不屏蔽一些电话，免得总被打扰。他卖掉一些物品来还债。他妻子说，他开始变得沉默寡言。年底假期的时候，夫妇俩把帐单放在一起算了算，发现他们一共欠债4万美元，而且根本无力偿还。
2003年1月，海斯特向往常一样去珠宝店上班。他说，清点存货，为客户调换商品等日常工作他做起来都有困难。医生最后给他开了抗抑郁症的药。2月份他咨询了一位律师，6个星期之后，律师以海斯特的名义为他申请了破产保护。
破产律师说，像海斯特这样的中年破产者，多数都有自购住房，往往都会变卖家产来清偿信用卡帐单。但这种做法往往适得其反。在个人申请破产保护时，信用卡欠帐和其他未担保债务都被一笔勾销，而住房抵押贷款不会。
中年破产申请者往往还会提取退休金帐户上的钱，即使这个帐户也是受到破产申请保护的。破产律师们说，年龄大一些的个人破产申请者往往都会犯这样的错误。
破产的不利后果各州不同。在有些州，申请破产可能导致失去住所。信用报告会连续7-10年登载你的破产申请。近几年，提高个人破产门槛的立法在国会已接近通过，但尚未成功。
加州圣荷塞破产律师罗恩?威尔科克斯(Ron Wilcox)说，“年龄大的人行动也迟缓。有些人到我这里求助之前，已经自己想尽了各种办法，但却一年比一年债台高筑。”
贝利?奥尼尔(Barry O'Neal)不顾朋友们的劝告，把信用卡债务的偿债期定为10年。现年62岁的奥尼尔为纽约音乐出版商Carl Fischer工作，他说，“我觉得这是个道德问题。这些债务是我以前花信用卡公司的钱而得来的。为了还债我努力了很久。”
奥尼尔的债务归根于上世纪80年代和90年代。当时他的一位家人患上了神经性疾病，奥尼尔为他支付医疗费。他说，这类疾病的很多医疗费都不能通过保险报销。但与此同时，奥尼尔认为自己也不能降低自己的生活费用，不能减少参加音乐会和外出就餐的次数。现在他说，“当时我花钱有点儿大手大脚了。太傻了。”
可是欠债却不见减少。接下来的10年，奥尼尔想尽办法偿还欠款，一度还提取养老金来还债。5年前，他的债务超过了25,000美元，去年已经超过了4万美元。
奥尼尔说，“利滚利越来越多了。”现在他每年收入5万美元，“我终于认识到我追不上债务增加的速度了，只会越来越落后。”
去年，奥尼尔终于放弃还债。一位律师朋友主动免收他的律师费后，他申请了破产保护。
