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As Debts Threaten Home Ownership, More Retiring Baby Boomers Turn to Bankruptcy

Living with large debts makes it hard enough to keep up with mortgage payments during your working years. But what will happen to your home once you retire?

A growing number of seniors are about to find out. By 2030, the population of people over 65 in the U.S. will more than double to 73 million, according to a new report by AARP and the Harvard Joint Center for Housing Studies. On average, these retirees will need to allocate more than 30 percent of their income to housing, leaving little left over for expenses like medical care, utilities, transportation and food.

The problem is mortgage debt. American homeowners of all ages owe money on their homes, but carrying debt is especially dangerous when one is soon to be (or already) subsisting on a limited income.

In the past, it was common for seniors to pay off their mortgage debts in full by the time they reached retirement. These days, 70 percent of Americans aged 50 to 64 and 40 percent of those over 65 still owe a good deal of money on their properties.

Meanwhile, non-housing debts are rising as well thanks to credit card debt and car loans, while pensions and benefits are simultaneously disappearing.

But that’s always been the trouble with debt. The less income you have, the less you can put toward paying off the balance on credit cards, loans and other obligations. And the less you put toward paying down your balances, the more your debts grow. It’s a pattern that can be hard to break, even when you’re bringing home a paycheck.

When overwhelming debts are interfering with your ability to keep up with bills, pay for basic expenses, and save for retirement, you need a real solution. For many Americans, the answer is bankruptcy.

There’s a reason seniors have become the fastest growing portion of the U.S. population filing for bankruptcy, according to the University of Michigan. Bankruptcy is the fastest and most effective way for most folks to regain control of their finances amid staggering debt loads, from credit card debt to medical costs. For homeowners behind on mortgage payments, filing for Chapter 13 bankruptcy can also stop foreclosure.

You shouldn’t have to choose between keeping your house and paying your bills in retirement. For many seniors – and for people of all ages – bankruptcy makes it possible to do both.

To learn if bankruptcy is right for your personal financial situation, contact DebtStoppers today to schedule your free one-on-one debt analysis with an experienced bankruptcy attorney.

Resources:

Baby Boomers Face Big Housing Crunch, by Melanie Hicken, CNN Money

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