She declared bankruptcy.

While the bankruptcy filing rate for those under 55 has fallen, it has soared for older Americans, according to a new analysis from the Consumer Bankruptcy Project, which examined a sampling of noncommercial bankruptcies filed between 1991 and 2007.

The older the age group, the worse it got – people 65 and up became more than twice as likely to file during that period, and the filing rate for those 75 and older more than quadrupled.

“Older Americans are hit by a one-two punch of jobs and medical problems and the two are often intertwined,” said Elizabeth Warren, a Harvard Law School professor who was one of the authors of the study. “They discover that they must work to keep some form of economic balance and when they can’t, they’re lost.”

That’s precisely what happened to Noda. She worked all her life, on a hospital’s housekeeping staff, and later selling boat tickets to tourists. She cut corners when she needed to but always paid the bills she neatly logged in a ledger.

“I was born during the Depression,” she said. “I paid the bills whether I ate or didn’t, whether I went to the doctor or not.”

It all worked fine for Noda, a widow for 23 years, until she was forced to undergo double-bypass surgery and deal with respiratory problems. She started using two credit cards more frequently for food and bills. Before long, she was $8,000 in debt and behind on car payments.

“I’d go to bed and all I had on my mind was bankruptcy,” she said. “I had nothing left.”

Noda’s car was repossessed, but her trailer home wasn’t in jeopardy because her daughter owns it. While she’s covered by Medicare and receives $968 in Social Security each month, she relied on her job for other expenses. She had no choice but to get help from Jacksonville Legal Aid and declare bankruptcy.

Most bankruptcies are still filed by people far younger than Noda, but the percentage the younger filers make up has fallen over the 16-year period, according to the Consumer Bankruptcy Project analysis, which will be published in the Harvard Law and Policy Review in January.

In 1991, the 55-plus age group accounted for about 8 percent of bankruptcy filers, according to the study, which looked at more than 6,000 cases filed in 1991, 2001 or 2007. By last year, filers 55 and over accounted for 22 percent.

Each age group under 55 saw double-digit percentage drops in their bankruptcy filing rates over the survey period, older Americans saw remarkable increases. The filing rate per thousand people ages 55-64 was up 40 percent; among 65- to 74-year-olds it increased 125 percent; and among the 75-to-84-year-old set, it was up 433 percent.

A number of factors are contributing to the increase. Higher prices for ordinary consumer goods have hit seniors on fixed budgets. For older Americans living below the poverty level, or not far above, a safety net likely doesn’t exist for economic setbacks such as medical problems. And some fall prey to scams that cripple their finances.

Warren noted increasing numbers of Americans are entering their retirement years with significant debt and are still paying off mortgages. She said it was wrong to assume that lives of luxury are bankrupting seniors; rather, they’re incurring debts to meet needs such as medical treatment.

“There’s no evidence that the problem is consumerism,” the professor said.

Nor is there a significant aging trend to blame. While the country is set to experience a notable age shift in the coming years, no major one took place between 1991, when the average age was 33, and 2007, when it was 36.

Frank and Hazel Peters lived frugally their entire 53-year marriage. They always rented a home but decided after the husband’s retirement from a factory job that they would cash in his 401(k) and buy a manufactured home down a gravel road in tiny Hastings, a town of cornfields and potato farms.

But they fell victim to fraud when they tried to fix a plumbing problem that had black, sulphur-smelling water coming through the pipes of their new home without enough funds to fall back on. They declared bankruptcy.

“We knew we had no other option,” 73-year-old Hazel Peters said. “We’d probably be out on the street.”

Bankruptcy, tough no matter a person’s age, is especially hard when you don’t have many years left to recover. Warren said some seniors fear telling their families because they’re afraid they’ll be put in a nursing home if they’re seen as unable to take care of their affairs.

Many who file also express a sense of relief.

Wilona Harris, 71, filed bankruptcy two years ago because of medical bills she and her husband accrued.

“This phone rang all the time. It made you not even want to pick up. Sometimes you think, ‘Let me go jump off a bridge somewhere,’” Harris said at her Jacksonville home. “You have to cry and try and figure out what in the world could I do.”

At least now, Harris says, she can fall asleep without crying.

Following are four (4) questions for commercial landlords to review with an attorney  whenever a commercial tenant files for bankruptcy protection:

1.    Have You Filed a Proof of Claim(s)?  As soon as the tenant/debtor files for bankruptcy protection, commercial landlords should ensure their rights to payment(s) by filing appropriate proofs of claim.  It is advisable to review with your attorney the current account history and lease to ensure all fees are being accounted. Landlords may be able to file upto three (3) different types of claims:

    a.    Pre-petition Claim. Section 502 of the Bankruptcy Code provides that creditors are permitted to file a proof of claim for all pre-petition charges and assessments owed.  If a tenant files for bankruptcy, the landlord is permitted to file a proof of claim for all fees and charges incurred prior to the filing date;

    b.    Post-Petition Administrative Claim.  Section 503(b)(1) of the Bankruptcy Code provides a creditor a priority claim for all “actual, necessary costs and expenses of preserving the estate”.  If the tenant remains in the premises after the bankruptcy and does not reject the lease, the commercial landlord may be allowed payment  ahead of other creditors for amounts incurred during this period; and

     c.    Post-Rejection Damage Claim. Section 503(b)(7) of the Bankruptcy Code provides a commercial landlord the right to be paid for “post bankruptcy rejection” damages. If the tenant rejects the lease, certain damages incurred and the remainder of the lease may be permitted priority before payment of certain claims.

 2.    Is the Debtor/Tenant Assuming or Rejecting the Lease?  Landlords should inquire whether the debtor/tenant intends to assume or reject the lease.  Bankruptcy Code Section 365 provides that tenants are permitted to assume a commercial lease, as long as they cure all post-petition defaults. If they reject the lease, then the landlord may be able to proceed with an eviction action to remove the tenant. However, landlords should know that the Bankruptcy Code permits the debtor 120 days to decide whether to assume or reject the lease, with an additional 90 day extension.  All told, this can leave the landlord sitting around for more than 7 months without payment.  If your not being paid, it may be advisable to have the Bankruptcy Court allow you to proceed with an eviction action. 

 3.    Should you File a Motion for Stay Relief to Proceed with an Eviction?   The debtor/tenant may not advise their intent to assume or reject the lease.  As noted, during this time, the debtor/tenant can use the premises without paying anything.  The landlord is permitted to file a motion for “Relief from the Automatic Stay”.  This Motion, if granted,  permits the landlord to resume or commence with a state court eviction action.

4.    What to Do with Items Left by a Tenant?  If the debtor/tenant leaves equipment, inventory or equipment at the premises, can you just throw it away? Does anyone have an interest in the left over items, like the debtor/tenants’ bank?   Can you recover storage fees? When a tenant/debtor files for bankruptcy, these left over items may be part of the bankruptcy estate. Gaining proper approval from the Bankruptcy Court, before disposing of the left over “junk” is essential to limiting liability.  For instance, the left over property may be secured by a bank, financial institution or creditor. You may want to have a UCC Search conducted to ascertain whether any security interest exists.  If security interests are discovered, it is advisable to give notice to those entities, possibly through a motion with the Bankruptcy Court.

These are just a few of the questions a landlord should ask when a debtor files for bankruptcy.  By asking these questions at the start of the bankruptcy, landlords can limit the loss or liability, as well ensure their right to payment through the Bankruptcy Code.