Grandparents with children

No Way Around It… This Just Sucks!

I can’t think of any better way to summarize it…. IT JUST SUCKS that senior citizens in America are now filing bankruptcy in record numbers.  Since the early 90’s, the percentage of total bankruptcy filings by consumers over the age of 65 has more than TRIPLED.  Less than 30 years ago seniors made up approximately 2% of the total consumer bankruptcy cases filed (Chapters 7 & 13). Today, more than 1 out of 10 cases is filed by a senior citizen.

What happened? Why are so many good people who should be enjoying their “Golden Years” struggling financially? Well, there are a variety of factors at play, but the biggest culprit is easy to identify: soaring health care costs. If you are on a fixed income, such as a pension (if you are lucky) and/or Social Security how do you account for exploding health care costs (not to mention soaring housing and other living expenses)?  For many people, the only option is to put those additional and unexpected expenses on credit.

Taking on an additional job or “side hustle” is not always an option for our seniors. While technically illegal, age discrimination is very real and rampant (ask anyone over 55 if you don’t believe me); faster and faster changes in technology have made many senior’s skill sets obsolete; health challenges are a real obstacle to working and many seniors just can’t grind it out anymore. Putting medical bills, medications and every day expenses on the credit cards is a logical step to take when your expenses begin to exceed your fixed income.

The problem is, that solution can only last for so long. Eventually, you hit the wall on your credit limits and/or the payments on the credit cards become too much to handle.   Thankfully, there is the social safety net of bankruptcy available to help our seniors when they find themselves in this hole. It still absolutely sucks that so many seniors have to face this scenario when the main culprit is our broken health care system.

While I was doing my research for this blog post, one thought kept popping into my mind: I wonder how many of these seniors filed for bankruptcy when they really didn’t need to?  Many senior citizens are what I like to call “judgment proof.” Basically, creditor are not allowed to touch pension benefits, Social Security or other retirement benefits. These assets are considered “exempt” under the law and protected from creditor actions (levy, garnishment, etc). Seniors also enjoy expanded protection when it comes to equity in their homes and cars. Many seniors are completely protected from their creditors, but just don’t know it.

Seniors who find themselves struggling with debt should consult with an attorney who is not only knowledgeable about bankruptcy, but who is also committed to giving them ALL of their options. For some seniors, the best option might just be to NOT file a bankruptcy and put that money to other uses.

For some seniors, telling your creditors to “go pound sand” is a perfectly viable legal strategy.