More Older Americans Filing for Bankruptcy to Deal with Debt
A new study by the Consumer Bankruptcy Project says there’s been a fivefold increase in the number of older Americans filing for bankruptcy in recent years, with job loss, wage decreases, overwhelming health care costs, and reductions in safety net programs all contributing to the escalation. Seniors have reported going without food, prescriptions, and other necessities to meet their debt obligations, but it’s simply not enough. Read on for more information about handling debt and filing for bankruptcy as a senior American.
A Vicious Debt Cycle
According to the Consumer Bankruptcy Project, many older Americans saw their wages and savings slashed during the recession and never recovered. And because most seniors truly want to honor their debt obligations, they do whatever they can to pay their bills, including turning to credit cards and payday lenders with high interest rates. Once those debts pile up—on top of the others—bankruptcy may seem like the only option to get out from under water, and it may be the best option depending on the circumstances.
When Bankruptcy May Be a Good Option for Seniors
Filing for bankruptcy can be an easy way to wipe out debt and maximize money available to pay monthly bills—if you have the type of debt that can be discharged in bankruptcy. Chapter 7 may be a good option when most of your debt is medical debt and credit card bills, and Chapter 13 can help you catch up on home or car arrearages. Also, if you’ve kept your retirement accounts (401(k)s, 403(b)s, IRAs, etc.) intact, and your Social Security benefits in a separate account, bankruptcy may work well for you because these funds are exempt in bankruptcy.
When Bankruptcy May Not Be the Best Option
Bankruptcy may not make sense for you if you don’t have any assets a creditor can take. For example, if all you have are household items, a modest car, Social Security benefits, and a retirement account, creditors can’t touch any of these things in or out of bankruptcy, so filing for bankruptcy may not be necessary. On the other side of the coin, bankruptcy may not be the best option for you if you have too many assets to benefit from bankruptcy. In that case, your property and income won’t be protected from creditors, so you’d likely lose it in Chapter 7, and with Chapter 13, you’d be required to make a high Chapter 13 repayment plan payment. If creditor phone calls and letters are your issue, talk to a bankruptcy attorney specifically about stopping creditor harassment.
Talk to an Experienced Southern California Bankruptcy Attorney
If you’re struggling with debt and considering bankruptcy, please contact Rounds & Sutter for a free, confidential consultation. With offices in Ventura, Santa Barbara, and Westlake Village, we represent clients throughout Southern California, offering smart, compassionate legal counsel in the face of life’s challenges.