More seniors are filing for bankruptcy than ever before, which has been the result of a number of factors including rising healthcare costs, lack of retirement savings and less social security. Between the years 2013 and 2016, approximately one in every eight bankruptcy cases were filed by individuals who were older than 65. Twenty-one percent of those filing for bankruptcy were between the ages of 55 and 64.
The following mistakes were made by individuals in this age group as they attempted to explore options to avoid filing for bankruptcy.
Not Seeking Help Early.
Depending on the type of debt the person is dealing with, many creditors will work with a consumer on a payment plan if the person is not able to handle paying the debt in full. Seniors may be able to find help in free or low-cost credit counseling through a nonprofit credit counseling agency. If the senior is struggling to pay his or her mortgage, the State of Florida is part of the Hardest Hit Program, which provides assistance to homeowners who are struggling to pay their mortgages through payment assistance or mortgage modifications.
Debt settlement or debt relief companies exist for consumers who need assistance in handling their debt, but it is important that whatever agency the consumer chooses, that the person properly vets the entity to ensure that it is not a scam and will not get the person even further in debt. Many of these so called, ‘debt relief agencies’ target seniors, promising to eliminate their debt, but instead leave them paying high monthly fees and left more debt than they started with.
Using Debt to Pay Bills.
Many seniors live on a fixed income, which makes it extremely difficult for them to take on any unexpected expenses. When faced with the unexpected, seniors will use credit cards to pay off large bills or will take out cash advances to handle these expenses. The problem is these forms of debt come with high interest rates, penalties and fees if payment is missed. The result is the senior only digs himself or herself even deeper into debt.
Liquidating Assets to Pay Debt.
Desperate times often call for desperate measures. Many seniors will attempt to sell their assets to raise enough cash to pay off a debt. They may sacrifice a 401(k) or IRA to pay medical debt or other unexpected expenses. However, if money is taken out of these accounts too soon, the person will end up being hit with a harsh early-withdrawal penalty. Additionally, these actions will put the senior’s retirement and future quality of life in jeopardy if they are not able to replenish the accounts quickly enough before retirement. Retirement assets are protected in bankruptcy, and filing for bankruptcy may be the best route if liquidating retirement savings is being considered.
Going It Alone without Legal Assistance.
No one wants to pay legal fees, but most individuals do not fully understand the ins and outs of going through a bankruptcy. Filing for bankruptcy pro se is a risky decision and there are a number of pitfalls associated with the same. The assistance of an experienced bankruptcy attorney can prove to be invaluable for a senior who is already in over his or her head. Do not try to do it alone. The process will be more beneficial and seamless with the assistance of an attorney.
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: Barron’s- More Seniors are Declaring Bankruptcy. Here are 4 Mistakes to Avoid.