Most people are aware that the number of consumers filing for bankruptcy protection has grown dramatically over the last decade. A report released by the American Bankruptcy Institute simply confirms the numbers. According to a report published in AARP, the fastest growing population filing for bankruptcy protection is people over the age of 50. In 1991, people over the age of 55 accounted for eight percent (8%) of all bankruptcy filings. In 2007, that figure increased to 22 %. For people over the age of 75, the increase in filing percentage was even more dramatic: 567%.
There are many reasons for this increase in the need for bankruptcy protection: cost of living, health care expenses, and fixed income amounts combined with a dramatic decrease in investment returns.
Another problem area may be adult children and grandchildren. Before the current economic downturn, many parents routinely made gifts to children and grandchildren. Whether these gifts were done for estate tax planning or simply because they gifts were so needed, parents may have started a tradition they cannot continue. Unfortunately, even with dividend payments and interests rates sinking, many parents are not comfortable with telling their children they can no longer afford to make those same gifts. It is better to explain that previous gifting habits may have to be suspended rather than continue to make gifts that no longer consist of un-needed cash.
I Am Over 65, Should I Even File?
For people who are in financial trouble, that is the primary question. The answer is, “It depends on your circumstances”.
Filing may be beneficial if:
– Your credit card debt is more than you will ever be able to pay;
– You have no intention of ever applying for a mortgage;
– You are unlikely to apply for a job where a bankruptcy filing may disqualify you (e.g. bank teller);
– If you can eliminate the existing debt, you will be able to maintain a quality lifestyle.
Getting Beyond The Perception of Filing For Bankruptcy
Abraham Lincoln, P.T. Barnum, John Barrymore, Samuel Clemens (Mark Twain), Walt Disney, Debbie Reynolds, Johnny Unitas, and Burt Reynolds. These are just a few of the people that have declared – and survived – a bankruptcy filing.
Many people are concerned with the emotional aspect of what a bankruptcy filing may mean. However, the bankruptcy laws were enacted to give people a second chance – a clean slate to start again. The chance at a fresh start should not be limited to people less than 65 years old. Financial troubles can occur at any age and for a variety of reasons. For people over 65, the opportunity to increase their income is greatly reduced, and most seniors have already cut back on spending as much as possible.
If you are experiencing financial trouble, do not wait too long to consult with an attorney about whether a bankruptcy filing may be the best solution. Many attorneys will offer either a no cost or low cost consultation. The National Association of Consumer Bankruptcy Attorneys has a searchable web site.
Resources and Other Articles of Interest:
– Avoiding Bankruptcy (AARP). NOTE: I include this link for informational purposes. I strongly disagree with much of the advice contained in the body of the article. I disagree that bankruptcy should be a last resort and that credit consolidation agencies may offer solutions. It has been my experience that consolidation of debt for seniors is not a solution, and that waiting too long to file causes some people to continue to pay minimum payments for debt that could be completely discharged.