As part of the recent recession, bankruptcy rates have soared across the country. With high unemployment rates and the devalued housing market, many people have simply become unable to meet their financial obligations. Bankruptcy offers a practical solution for resolving financial problems, so it is not surprising that the number of people relying on this tool has increased.
What is perhaps surprising, though, is the shifting demographics of those filing for bankruptcy. According to a recent study conducted by the University of Michigan, the fastest growing group of people filing for bankruptcy is people over the age of 65. This shift has not simply been brought on by the recession though; the study shows that this trend started before the economy started to slow.
The problem is obvious. In retirement, income diminishes while routine costs stay the same or even rise. Many who intended to live on savings are finding their investments diminished. When income or savings cannot cover monthly expenses, many seniors turn to loans or credit cards, which eventually become unsustainable.
For individuals in this situation, filing Chapter 7 or Chapter 13 bankruptcy may be the best option. Bankruptcy provides a fresh start, so that a senior doesn't have to spend his or her retirement years fretting over past debts. Rather than devoting significant portions of a limited income to paying off interest and late fees, that income can go towards everyday living expenses.
Filing for bankruptcy does not necessarily require a person to surrender his or her home. Retirement accounts and Social Security benefits are protected from creditors up to a certain limit. Choosing bankruptcy leaves many seniors in a stronger financial position for their later years.
For more information about bankruptcy and whether it is an appropriate choice given your financial circumstances, speak with a knowledgeable bankruptcy attorney.
