Bankruptcy offers filers a fresh financial start, but for many bankruptcy petitioners, that start comes later in life. In the past three decades, the number of people over the age of 55 who have filed for bankruptcy has gone up significantly. This increase has many financial experts wondering why so many individuals nearing retirement are filing for bankruptcy.
According to a paper by Robert Lawless, the percentage of older Americans, specifically between the ages of 55 and 64, increased by 66 percent between the year 1991 and 2016. The number of bankruptcies filed by individuals between 65 and 74 increased by more than 200 percent between this time period. In fact, approximately 12 percent of all bankruptcy filers are over the age of 65.
One of the main reasons behind the increase has to do with medical debt. Six out of ten filers who were over the age of 65 said they filed for bankruptcy because they were unable to continue paying their medical bills. While they may have enough money to meet their daily needs, it only takes one major medical crisis for that person to be set back thousands of dollars in medical bills. The likelihood of someone facing a medical crisis also goes up significantly as a person age.
The research provided by Lawless stated that many older Americans who have filed for bankruptcy feel they have no other choice. By the time they file for bankruptcy, these individuals no longer have savings, and they are not bringing in a significant income beyond social security and what they have been able to save for retirement. They are often are forced to rely on credit cards to not only cover emergency medical expenses, but other unexpected costs, like home repairs and car repairs.
The more time that passes after a bankruptcy, the less effect it has on the person’s credit score. Therefore, if someone is in their early 60s and files for bankruptcy, he or she will eventually be able to get his or her credit score back on track with discipline and good financial habits. It is also possible to add a 100-word statement to the person’s credit report explaining why the bankruptcy was filed, such as an unexpected medical emergency.
If a person is considering filing for bankruptcy, it is always recommended that he or she contact an experienced bankruptcy attorney to discuss their options. Never ignore collection notices, especially legal actions to pursue a judgment on the debt.
How is Medical Debt Handled in Bankruptcy?
In bankruptcy, medical debt is treated the same as credit card debt. Medical bills are listed as general unsecured debt and can be easily wiped out in a Chapter 7 bankruptcy filing. Making the decision to file for bankruptcy is never an easy one. It can be difficult to get past some of the myths associated with filing for bankruptcy. Sometimes by waiting, an individual facing a lot of debt can find himself or herself in an even worse situation. Filing for bankruptcy can help protect valuable assets, including your home, pension, IRA and social security. It will put an end to wage garnishment and any lawsuit being filed to collect on the debt, thanks to the protections of the automatic stay.
If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.
Source: Market Watch- Why Are So Many People Over 55 Going Bankrupt?