Senior Citizen Bankruptcy and Why It Has Increased
According to a recent 2018 report, there has been a steep increase over the past decade in the amount of debt accumulated by individuals aged 75 or older. As the debt grows, so does the incidence of bankruptcy among American seniors.
The share of bankruptcy filers aged 65 and older is higher than ever before in history, a study by University of Idaho researchers suggests. In 2010, the average debt of households whose head was 75 or older at the time was 30,288 dollars. In 2016, the figure went up to 36,757 dollars.
The share of households in the age group that have accumulated debt has also increased. In 2007, 31.2 percent of families in the 75 and older age range had debt. In 2016, the percentage went up to 49.8.
Reasons for Increased Debt among Seniors
The higher cost of living has been quoted as the number one reason for the accumulation of unmanageable debt by senior citizens. Healthcare costs have also been growing, a fact that has had the most profound impact on the aging population.
In the past, many companies offered excellent pensions to employees. Social Security acted predominantly as a safety net. As the job market changed, the number of employers guaranteeing pension has gone down.
Today, many seniors live solely on Social Security because they have not been doing long-term financial planning. The safety net became a primary source of income. An increased lifespan of the Western population means that people live longer while they have limited funds to cover necessities over these years.
These combined factors have left many older Americans incapable of managing their finance and accumulating debt. Eventually, these seniors find no other option but bankruptcy as a way out of the situation. In the period from 1991 to 2016, bankruptcy filing among seniors increased 204 percent. Currently, seniors make up 12.2 percent of all bankruptcy filers in comparison to two percent in 1991.
What to Do about Debt
If you’re aged 60 or older and you’ve managed to accumulate a lot of debt, you could be wondering how to get your finances in order. There are several things you can do and the first one is to talk to an Arizona bankruptcy attorney.
Bankruptcy filings make a lot of sense for some pensioners but they’re not always the best choice.
Under Arizona law, retirement accounts are mostly protected in the case of a bankruptcy. The same applies to the home that you live in. A Chapter 7 bankruptcy can be used to wipe out medical or credit card debt. If you don’t have anything that creditors could take away from you, however, a bankruptcy filing isn’t going to be necessary.
Before going for bankruptcy, you may want to get in touch with creditors. It could be possible to come up with a more lenient repayment schedule that you’ll manage. There have been instances of some medical debt being discharged or seniors getting more favorable terms after sharing their situation with the respective institution.
It’s best to communicate with creditors as soon as possible. If you foresee financial problems in the future, discuss these now. Chances are that you’ll get a more favorable outcome than in the case of waiting for debt to accumulate.
If you have a credit card, try to make at least minimal payments on it. This way, you’ll avoid having action taken against you.
Finally, you should not feel guilty if you have to do a bankruptcy filing later on in life. In fact, bankruptcy can give you a clean slate and a chance to enjoy your retirement years. There’s nothing to worry about, especially if you’ve partnered up with a reputable bankruptcy lawyer who can answer your main questions.
Click here for information on senior citizen bankruptcy for Arizona residents.