A new study finds that older people are suffering the brunt of the bankruptcy and credit crisis. Among the key findings of the AARP-sponsored study, released this week:

* The rate of bankruptcy filings among those ages 65 and older has more than doubled 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.

Adding fuel to the bankruptcy fire are predatory lending practices. The Center for Responsible Lending released a study today showing that badly-designed bank "overdraft protection" plans alone strip an estimated $1 billion in wealth from people aged 55 and over each year.

How does this happen? Banks and credit unions automatically enroll customers in unauthorized "overdraft protection" plans that are designed to maximize fees -- usually around $30 a pop. As the Center argues:

Older Americans, like others, want the option to avoid unauthorized overdrafts and would rather be declined at the checkout if their debit card purchase would trigger a fee over $30. Their precious—and protected—Social Security benefits should not be confiscated to pay fees for essentially a loan they didn't ask for and often don't want.

Labels: aarp, bankruptcy, center for responsible lending, credit crisis, economic justice, predatory lending, seniors

Similar to how check cashers and payday lenders set up shop around military bases to prey on enlisted personnel and their families, they're now lurking around retirement homes to prey on the elderly. And worse, a loophole in federal law allows them to have Social Security deposits made directly to their accounts, from which they dole out "allowances" to their victims.

The Wall Street Journal explains:

Such lenders are increasingly targeting recipients of Social Security and other government benefits, including disability and veteran's benefits. "These people always get paid, rain or shine," says William Harrod, a former manager of payday loan stores in suburban Virginia and Washington, D.C. Government beneficiaries "will always have money, every 30 days."

The law bars the government from sending a recipient's benefits directly to lenders. But many of these lenders are forging relationships with banks and arranging for prospective borrowers to have their benefits checks deposited directly into bank accounts. The banks immediately transfer government funds to the lenders. The lender then subtracts debt repayments, plus fees and interest, before giving the recipients a dime.

As a result, these lenders, which pitch loans with effective annual interest as high as 400% or more, can gain almost total control over Social Security recipients' finances.

So it should come as no surprise that these outfits are "clustered around government-subsidized housing for seniors and the disabled" according to a HUD data analysis cited in the article.

The article has several horror stories, including the case of an illiterate senior in Alabama ("who believes he's 80 but isn't sure") who ended up homeless after getting tangled up with a large Georgia company that operates "lending stores" in Alabama, Georgia, Florida and Louisiana.

According to the article, arrangements between lenders and banks to redirect government benefit deposits aren't tracked by any regulatory agency so the extent of the problem is not known. But, it says that a "2006 study by the Consumer Federation of America found that one-fifth of those without conventional bank accounts are receiving their government benefit checks through nonbanks, including payday lenders that also operate as check-cashing stores."

Labels: economic justice, predatory lending, seniors

Tennessee lawmakers have introduced a tort "reform" bill aimed at protecting nursing home operators from lawsuits. The bill (SB4075/HB4053) would:

• Require lawsuits against long-term care facilities involving health-related services to be brought solely as medical malpractice action (see separate post about what they want to do to "malpractice" lawsuits)

• Allow operators to require patients to waive their right to a jury trial as a condition of admission

• Limit non-economic damages to $300,000

According to Medical News Today, a prominent nursing home operator says the legislation is needed because personal injury lawyers are driving up the cost of liability insurance:

"The average annual cost of items like liability insurance, legal services and other liability-related issues is now $500,000 per Tennessee nursing home - enough to hire and pay for 10 new nurses," said Steve Flatt, senior vice president of development for National Healthcare Corp., an operator of several Tennessee nursing homes.

"The problem is that our laws right now allow the filing of limitless lawsuits claiming tens of millions of dollars in damages," Flatt said. "The result is that the big- money personal injury lawyers from Texas and Florida have been arriving regularly to pelt our courts with lawsuits."

Raise your hand if you think nursing homes will use any savings from this legislation to hire more nurses.

And if the name National Healthcare Corp. rings a bell, it's probably because of the tragic nursing home fire at one of their facilities in Nashville that claimed sixteen lives. The deaths resulted in more than 30 lawsuits.

The company has been the target of other lawsuits alleging abuse and neglect, including a Warren Co. case in which the jury awarded $4.1 million in compensatory damages and $28.9 million in punitive damages, which were later reduced to $163,000.

The company was also the target of a probe into massive Medicare fraud. They settled with the U.S. Department of Justice for $27 million.

Instead of allowing special interests to influence legislation, Tennessee should pursue better regulation and oversight of nursing homes to protect the safety and dignity of patients in these facilities. Who lobbies for the people?

Labels: economic justice, seniors