Daily Archives: March 7, 2017

Senior Bankruptcy – Why Is It On The Rise?

No, there is no age maximum for filing bankruptcy.

too old to file bankruptcy?
too old to file bankruptcy?

In the old days, senior citizens had savings, equity

in their homes to pass on to their heirs.

And it was harder to borrow money, after retirement.

when, income was lower.

Not so much anymore.

Ben Zigterman reports in the news-gazette website that

In 1991, just 1.5 bankruptcies per 1,000 in America were filed by those 65 and older.

Twenty five years later, that number has quadrupled, according to University of Illinois law Professor Robert Lawless, based on preliminary data from the Consumer Bankruptcy Project.

Why Are Older Americans Filing Bankruptcy?

The oldest clients I filed Chapter 7 bankruptcy for were in their 80s.

They had worked hard all their lives, accumulated a fair amount, even having donated a home to their church.

But, kids with drug issues derailed them.  Posting bond and paying lawyers and grandkid expenses ate up their savings and threw them into debt.

From the linked to article:

“We’re seeing a shift in the ability of people who are in young adulthood to manage their own affairs,” Lawless said. “I think that’s a big part of the story of the financial problems of elder Americans.”

Some senior citizens can handle their own debt, but, co-signed student loan debt for kids or grandkids.

“The number of consumers age 60 and older with student loan debt has quadrupled over the last decade in the United States, and the average amount they owe has also dramatically increased.”

How Bad Is It For Seniors To File Bankruptcy?

Bankruptcy should be a last resort.

The question for anyone is, what will bankruptcy do for me, and, what can happen if I do not file?

So, of course, it depends.

Senior citizens may be judgment proof, in that Social Security is exempt,

EXCEPT from some government debts, like student loans.

Home equity may be exempt, this can depend on what state your home is in.

So, if there are neither assets nor income to protect, bankruptcy does  not help.

EXCEPT, most folks do not like harassing calls from creditors, and bankruptcy does stop that.

However, more seniors are still working, even if part-time, and wages may be garnished in some states, like Michigan.

Seniors usually are not as worried about re-establishing credit, as they already have a home and whatever vehicles they need.  Although, you can always get car financing, from someone.  It just cost more if your credit is bad.

As always, contact an expert.  But do not be surprised if someone you know over age 65 has debt problems.


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