Emerging from the pandemic, an increasing number of older consumers are experiencing problems with debt. According to a Forbes article from November 2022, the poverty rate for individuals over 65 has increased dramatically over the last year. Moreover, 35% of people over 65 report experiencing difficulty paying for regular household expenses such as rent, food, and healthcare expenses. Many of these older consumers are turning to credit cards and other forms of debt to survive. In such a scenario, older consumers who are overwhelmed with debt may want to consider whether bankruptcy is a viable option.
Bankruptcy can be the right choice for seniors if they have no better way to deal with their debts. Filing for bankruptcy may make it possible for older consumers to eliminate the legal obligation to pay most or all debts, stop almost all creditors from taking any steps against them except through the bankruptcy process, catch up on missed payments on home mortgages, property taxes, auto loans, and other debts secured by property they wish to keep, stop debt collection harassment, wage garnishment, and similar creditor actions to collect a debt, and prevent termination of utility service or restore service if it has already been terminated.
However, bankruptcy cannot cure every financial problem, nor is it the right option for every individual. In bankruptcy, it is usually not possible to eliminate certain rights of "secured" creditors, discharge types of debts singled out by the bankruptcy law for special treatment, such as child support, alimony, court restitution orders, criminal fines, and most taxes, and discharge debts that arise after bankruptcy has been filed. Therefore, older consumers should weigh the alternatives before filing for bankruptcy.
Older adults should seek advice from a bankruptcy professional prior to filing for bankruptcy. A professional can help older consumers determine whether bankruptcy is the best option for their situation. Older consumers may wish to delay a bankruptcy filing until they are reasonably sure that they will not incur new major debts. Additionally, for some older consumers, simply becoming aware that they are "collection proof" may reduce their stress and desire to file bankruptcy. An older consumer is "collection proof" if all of their assets and income are protected by law from a creditor trying to collect on a debt.
In conclusion, filing for bankruptcy can be a good option for seniors overwhelmed with debt, but it is not the right option for everyone. Older consumers should carefully consider their financial situation, weigh the alternatives, and seek advice from a bankruptcy professional before deciding whether to file for bankruptcy. (Source: National Center on Law and Elder Rights)
About APILO’s Elder and Disability Rights Project:
APILO’s Elder and Disability Rights Project provides legal services in a variety of areas to assist elders and individuals with disabilities to receive public benefits and live a life free from abuse.
The Elder Team works to prevent abuse towards elders and people with disabilities and to assist survivors of abuse. We work closely with senior centers, churches, and senior meal sites to keep our services accessible.
With a team of exemplary attorneys and dedicated staff, the team provides a wide range of legal services, including naturalization assistance, other immigration cases, Elder Abuse, Estate planning, eviction defense, conservatorship, guardianship, and restraining orders, to name a few.
If you want to learn more about what our team does, please feel free to reach out to us by email: gpalomares@apilegaloutreach.org.
