According to a recent report from the Institute for Financial Literacy, bankruptcy filings are on the rise among older Americans. In the past, most retirees who file bankruptcy have been driven into financial ruin by unmanageable medical bills. These days, however, its more likely to be credit card and other consumer debt.
Credit card interest and fees can easily spin out of control, especially for elderly people on fixed incomes who may turn to credit cards in order to make ends meet especially when they struggle with even the basic necessities like medical care and food. Some retirees who now struggle with debt may not realize that some or all of their income is protected from creditor claims by a federal law that prohibits Social Security benefits from being garnished except to pay for child support, alimony or debts owed to the federal government such as delinquent taxes. Even seniors whose only income is Social Security may still be vulnerable to creditors if they own other assets such as a home, cars, or family heirlooms, which creditors may seize to pay off debts.
Bankruptcy May Help Protect Assets
Most seniors with relatively few assets are able to emerge from bankruptcy without losing much if any property. Since certain assets, known as exempt property, are excluded from the bankruptcy liquidation process. Also a debtor’s home and other property may also receive temporary protection once the bankruptcy case is filed through an legal doctrine known as the “automatic stay,” this is an order from a bankruptcy judge that prevents creditors from taking collection action for a set period of time against the debtors property. Many people in Utah, including senior citizens, who are struggling with repressive debts or are experiencing harassment from creditors should speak with an experienced bankruptcy lawyer to learn more about their options.