Debt is an issue that affects American adults of all ages. However, in recent decades, there has been an alarming increase in debt and financial instability for seniors. If you are a senior citizen who is struggling under significant debt, you are not alone. You probably feel tremendous stress and uncertainty, especially if you have health problems and face mounting medical bills. Rather than continuing to fall behind financially or risk losing your home, it may be time to consider debt forgiveness for seniors. Filing bankruptcy can reduce debt and provide a path to a brighter future.
If you’re among the countless seniors in America struggling with debt, you’re not alone. Getting out of debt may seem impossible, but a bankruptcy attorney can help you explore and understand your options.
Senior Citizen Bankruptcies
Bankruptcy Can Provide Debt Relief for Seniors
Between inflation, the rising cost of living, and a shrinking social safety net, the number of older Americans in debt and declaring bankruptcy has been steadily increasing for decades. Recent data from the Federal Reserve indicates that while debt impacts everyone, seniors have been hit particularly hard:
- From 1992 to 2022, debt for all age groups under 65 doubled.
- In that period, debt for households headed by someone 65 to 74 quadrupled.
- Debt for households headed by someone 75 or older increased sevenfold.
Many seniors are becoming so burdened by debt that they declare bankruptcy, and the number of older Americans doing so has been on the rise since the early 1990s. Currently, people age 55 and older make up 20% of those declaring bankruptcy.
If you’re among the senior citizens dealing with unmanageable debt, bankruptcy may be worth considering. For younger people, bankruptcy can be a way to achieve a clean slate before rebuilding their finances and careers. For older people, it can be a way to avoid the stress of debt collection and live out their golden years in peace.
Depending on your income and the type of bankruptcy you file, you may be able to have debts like these discharged:
Medical Bills
It’s not uncommon to encounter rising medical costs as you age. Bankruptcy may help you avoid accumulating medical bills you can’t pay.
Credit Card and Loan Debt
Consumer debt — particularly high-interest debt like credit cards — can quickly become unmanageable. If you’ve fallen behind on payments, bankruptcy stops debt collectors from harassing you or suing you for debts you are unable to pay.
Past-Due Rent and Utility Bills
With the rising cost of housing, it can feel impossible to afford current housing — let alone past-due housing costs.
Social Security Overpayments
Generally, if you receive a Social Security overpayment, you must pay it back. When you’re struggling to make ends meet, this can prove to be impossible.
There are a handful of debts that generally can’t be discharged, but these debts don’t always impact seniors. They include student loans, child support, spousal support, and taxes.
Ready to put your financial worries behind you? We’re ready to help. Call Fesenmyer Law Offices at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati) to request a free consultation.
Bankruptcy Can Stop Your Financial Worries in Their Tracks
You Can Put an End to Harassing Phone Calls from Creditors
The moment you file for bankruptcy, creditors are required by law to cease all collection activities. This can be a tremendous relief. Filing bankruptcy can also halt home foreclosure activity in some cases. It gives you a chance to catch your breath before moving forward.
Generally, retirement accounts, pensions, and Social Security benefits are protected during bankruptcy and remain beyond the reach of creditors. However, owning a home can become complicated in senior bankruptcies because many older Americans own their homes outright (no longer mortgaged) and some homes have significant equity in them.
The amount of equity in your home protected during bankruptcy varies from state to state – this is called a homestead exemption. There is an Ohio homestead exemption that allows you to protect a certain amount of equity in real property you use as a primary residence. Remember, this is equity (market value minus debt on a home), not the value of your home or the outstanding mortgage on your home. A skilled senior bankruptcy attorney can advise you on how bankruptcy would affect your home ownership situation.
What Are the Different Types of Bankruptcy?
Understanding Your Options
There are generally two types of individual bankruptcy, and which one you choose depends on your individual financial situation. These include Chapter 7 bankruptcy and Chapter 13 bankruptcy. The right bankruptcy lawyer can help you decide which of these is best for your situation, but here’s a general overview of both:
Chapter 7
Chapter 7, often referred to as “fresh start” bankruptcy, is for individuals whose income is too low to pay monthly living expenses and debt payments, including credit cards, medical bills, utilities, payday loans, or personal loans. The process is over in a few months, enabling you to start fresh and begin to rebuild your credit without the burden of high monthly costs.
Once your debt has been discharged, you will have little debt remaining — or none at all. The bankruptcy court may require that some assets be sold to pay creditors, but individuals often are able to retain their homes and vehicles if you agree to continue to pay monthly mortgages and loan payments.
Chapter 13
Chapter 13, often referred to as “wage earner” or “reorganization” bankruptcy, is for individuals who have a steady income and do not qualify for Chapter 7. With this plan, your debts are “reorganized,” meaning you repay them with a single, affordable monthly payment. The plan lasts three to five years, and upon its completion, your remaining debts are discharged. You can generally keep your assets if you declare Chapter 13 bankruptcy.
Contact a Senior Bankruptcy Attorney Today
When It Comes to Debt Forgiveness for Seniors, You Have Options
If you are a senior or retiree and are burdened with significant debt, it may be time to look at your bankruptcy options. Medical bills, household expenses, utility bills, credit cards, and other costs may be insurmountable, and a fresh start could put you back on your feet. Fesenmyer Law Offices provides affordable bankruptcy services.
We offer a free initial consultation and can help you get back on the road to financial freedom. To learn more about how we can help, call us at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati).
