Recent studies have indicated that individuals over the age of 65 are the fastest growing demographic of consumers seeking personal bankruptcy protection. While filing bankruptcy is never an easy decision, it may be the best option for some retirees.
Elders' debt is often driven by medical bills combined with a decreased income in retirement, CNBC.com reports. Retirees often have too much confidence in Medicare to cover their health needs without taking into account the significant out-of-pocket expenses they may have to incur. Many then finance their medical debts with credit cards, which can lead to collection calls by creditors and debt collectors. Older Americans carry 50 percent more credit card debt than their younger counterparts, according to a study by the University of Michigan Law School.
Filing for bankruptcy in such a scenario may not be the worst option, according to the news source. Many states have "homestead exemptions" built into their bankruptcy laws, which may allow a bankrupt elder to keep his home, and social security and retirement accounts are reportedly exempt from liquidation by creditors. This provision may allow seniors to keep a certain stream of income while having specific debts discharged.
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