Is it Best to Prevent Elderly Bankruptcy?

In recent years, more older adults and the elderly have been seeking bankruptcy protection. In some cases, filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy can allow a person to get a fresh start financially. Chapter 13 bankruptcy can be especially beneficial to consumers who are facing foreclosure and want to find a way to stay in their homes and get back on track with mortgage payments. But is bankruptcy really the best option for seniors? According to a recent article in Investment News, bankruptcy may not be the best way for older adults to deal with debt. While younger people can rebuild savings and credit profiles, that work is more difficult for someone at the age of retirement. The older a person is, the more difficult those tasks become. Accordingly, for an adult aged 70 and up, getting back on track financially can be more difficult than it may seem.

Yet whether bankruptcy is the right decision for you always depends upon your particular circumstances. If you have questions about filing for consumer bankruptcy, you should speak with an Oak Park bankruptcy attorney.

Senior Citizens Filing for Bankruptcy
More and more older adults are filing for bankruptcy. As the article underscores, “the number of elderly Americans filing for bankruptcy relief has increased dramatically over the past three decades.” Currently, about 12% of consumer bankruptcy cases are filed by seniors. To give you a sense of how that number has shifted in more recent years, the Consumer Bankruptcy Project reports that only about 2% of personal bankruptcy cases were filed by seniors in 1991.

The fact that more seniors are filing for bankruptcy does not necessarily mean that older adults are struggling more than their counterparts in the 1980s and 1990s. Rather, as the article points out, there are a wide variety of reasons for rising rates of elderly bankruptcy, “including the shift from pensions to defined-contribution 401(k) plans, longer lifespans, higher health care expenses, and poor spending and saving habits.” For many seniors, medical debt is a major reason for bankruptcy filings.

Options for Avoiding Bankruptcy in Older Adulthood
Given that it can be difficult for many seniors to recover financially from bankruptcy, it may be a good idea to consider options for paying down debt to avoid bankruptcy when possible, according to the article. It is often easier than you might think to manage a payment plan for medical debt, and there are also options available for paying down credit card debt.

Seniors should also consider making a clear budget that includes specific amounts of all benefits, including Social Security and Medicare supplement plans. In terms of the latter, looking into options for paying out-of-pocket costs for healthcare may be able to limit the amount of medical debt owed. Of course, avoiding bankruptcy may not be the best solution depending upon a person’s circumstances, as well as the amount and type of debt owed.

Seek Advice from an Oak Park Consumer Bankruptcy Lawyer
Making the decision to file for consumer bankruptcy can be a difficult one, especially when you do not have a clear sense of what options may be available to you. The dedicated consumer protection advocates at our firm can discuss the pros and cons of personal bankruptcy with you today. If you do decide to file for bankruptcy, we can assist you at every stage of this complicated process. An experienced bankruptcy attorney in Oak Park can talk to you today about your situation. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

How to Deal with Debt in Retirement



Can I Seek Emotional Distress Damages in a Bankruptcy Case?

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