There is an alarming trend that is growing in America, and it has been made worse by COVID-19 in 2020. More and more older Americans and retirees are burdened with significant debt. A recent study shows that individuals age 55 and older with debt grew from 54% in 1998 to 68% in 2019. The research, conducted by the Employee Benefits Research Institute (EBRI), shows that retiree debt is greater among minorities and women.
Another study shows similar trends, stating that the number of bankruptcies filed by senior citizens is rising significantly. Currently, one in in eight bankruptcy filers is 65 or older, up 500% from just 25 years ago, according to the study, “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society.” The study says, in part:
“The social safety net for older Americans has been shrinking for the past couple decades. The risks associated with aging, reduced income, and increased healthcare costs, have been off-loaded onto older individuals.”
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.
At Fesenmyer Cousino Weinzimmer, we have bankruptcy lawyers serving central and southwestern Ohio. We can put an immediate stop to harassing phone calls and letters. To learn more about how we can help, call us at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati). We offer a free initial consultation and can help you get back on the road to financial freedom.
Senior Citizen Bankruptcies
A bankruptcy can provide senior citizen credit card debt relief.
There are several types of debt that can be discharged through senior citizens bankruptcies. This means that the debts will be eliminated, and you will no longer be responsible for paying them. Debts that can be discharged through bankruptcy include:
- Hospital and medical bills
- Credit card debt
- Personal loans from family and friends
- Revolving consumer credit accounts
- Utility bills
- Repossession deficiency balances
- Collection agency accounts
- Social Security overpayments
- Auto accident claims (except those for DUIs)
- Money owed under lease agreements, including past-due rent
There a just a few kinds of debt that typically cannot be discharged through bankruptcy, and many of these do not affect most seniors. These include:
- Child support
- Student loans (except in rare cases)
- Debt incurred by fraud
- Taxes (except in rare instances)
Bankruptcy courts were established to provide relief for seniors and other citizens who are laboring under debt that they have little hope of repaying. It is designed to provide a fresh start for individuals by reestablishing a stable financial footing. Starting fresh means that you can enjoy your senior years rather than lying awake at night worrying about creditors.
How Can Seniors Get Out of Debt?
Elderly debt collection laws: 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?
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.
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. Upon discharge of your Chapter 7, you will have little or no debt remaining. 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, often referred to as “wage earner” or “reorganization” bankruptcy, is for individuals who have a steady income and do not qualify for Chapter 7. Chapter 13 is a consumer debt reorganization that enables senior debtors to repay financial obligations affordably and in one monthly payment over a three- to five-year period. Chapter 13 is an option that is available to help take the control back from your creditors that are foreclosing on your home or repossessing your vehicle that you want to keep. Chapter 13 allows you to repay a portion of your debt through a court-approved repayment plan that you can afford. Once you successfully complete the repayment plan, the remaining eligible debt is discharged.
Chapter 13 bankruptcy is often the best choice for homeowners with more equity in secured assets than they can protect with their Ohio bankruptcy exemptions and who wish to keep these assets, or for people whose income is too high to qualify for a Chapter 7 bankruptcy. To file Chapter 13, you must have a regular source of income and have some disposable income to apply toward your Chapter 13 payment plan.
Contact a Seniors Bankruptcy Attorney Today
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 Cousino Weinzimmer offers affordable bankruptcy services. To learn more about how we can help, call us at 614-228-4435 (Columbus), 937-222-7472 (Dayton), or 877-654-5297 (Cincinnati). We offer a free initial consultation and can help put your financial worries behind you.