As More Elderly Americans Find Themselves with Large Debts, Many Turn to Bankruptcy
For years, it was rare to find an elderly American with debt, as those old enough to remember the Great Depression were usually very wary of credit. It was even less likely to find a retiree filing for bankruptcy.
But all that may be changing.
Seniors 65 years and older are the fastest growing portion of the U.S. population filing for bankruptcy, according to the University of Michigan.
And according to the Employee Benefit Research Institute, the number of households with credit card debt headed by a person 75 or older doubled between 1998 and 2010 – from 11 percent to 22 percent.
So what’s behind this sudden rise in debt among the elderly? Today’s seniors simply don’t have enough money saved up for retirement.
Between losing traditional pensions and supporting younger family members (one study revealed that a quarter of those over 50 had given money to a relative), more and more seniors feel they have no choice but to rely on credit cards. Toss medical bills and prescriptions into the mix, and unsecured debt can quickly spiral out of control.
In the past, indebted older people have been hesitant to file for bankruptcy out of fear. However, as more people of all ages find debt relief with bankruptcy, many of the most common bankruptcy myths are being dispelled.
For instance, many senior citizens worry that filing for bankruptcy will threaten the little income they have left. But bankruptcy can’t touch Social Security benefits or most retirement accounts. In addition, because Social Security doesn’t count as income, many retirees are able to fall within the income limits necessary to wipe out debts with Chapter 7 bankruptcy (as opposed to making payments through the court system with Chapter 13).
Another common fear is that bankruptcy will be a humiliation. However, these days, personal bankruptcy is quite discrete. Unless you’re a famous celebrity, it’s improbable than anyone will find out you’ve filed – unless, of course, you choose to tell them. For a retired person, there’s no concern that an employer will find out. And in many cases, some of the friends and neighbors you worry will discover your bankruptcy filing may have already filed themselves.
There’s one more reason seniors are filing for bankruptcy: estate planning. When an elderly person dies, creditors can come after the debt during probate – leaving little to no inheritance for loved ones. But when a person files for bankruptcy, their house is protected from foreclosure and their credit card debt is eliminated – allowing assets to be passed on as desired.
Bankruptcy is a big financial undertaking, and it’s not for everyone. However, if you’re spending your retirement stressing over creditor harassment, unpaid bills and an empty bank account, it may be time to look into bankruptcy.
After working all those years, why spend your hard-earned retirement struggling to stay financially afloat? If you’re drowning in debt, bankruptcy can be your lifesaver – no matter what stage of life you’re in. To learn more about bankruptcy, contact DebtStoppers today and schedule your complimentary debt consultation with a knowledgeable DebtStoppers bankruptcy attorney.