Bankruptcy among older Americans is on the rise. Seniors who have worked hard all their life and expected to enjoy a peaceful retirement often find themselves beset on all sides by medical bills, loans, and credit card bills which start eating into their nest egg and eating into their savings very quickly.
Other social and economic changes are behind the shift. Seniors are raising grandchildren, supporting adult children, and working longer than previous generations. 401K plans have turned out to be poor substitutes for pensions, and many seniors find they have to wait to access their social security benefits.
If you are a senior in Pennsylvania or New Jersey who is already struggling financially, there are a few things you should know.
You need to know your rights.
Collection calls can send your blood pressure skyrocketing, but they don’t have to. You don’t even have to take them, and you can make them stop.
The key is to familiarize yourself with the Fair Debt Collection Practices Act, which gives you a guideline for getting creditors off your back. This is a smart decision because it will give you the opportunity to take a breather and think about what’s best for your future.
You may be “judgement-proof.”
You don’t want to take a guess here—consult with a qualified bankruptcy lawyer. If all your income and assets are protected by law creditors don’t really have much they can do to you except to report delinquencies on your credit. If you don’t plan on using credit too much in the future the barking of various creditors might not matter in the least.
However, judgement-proof or not you may still want to file if your utilities are in danger of being shut off, if you are struggling with certain tax debts, if you do anticipate needing credit again in the future, or if you are in danger of losing your house or your car. Preventing lawsuits is not the only reason to file for bankruptcy.
You have options for debts you can’t discharge through bankruptcy.
Though the tide is turning, student loans are still some of the hardest loans to discharge through bankruptcy. In a time where seniors owe $67 billion in outstanding student debt, this is a concern. Whether the debt is yours or a child’s, defaulting can be a dangerous decision. Federal student loan holders can garnish a Social Security check if you have defaulted, for example.
If you can prove undue hardship you may still be able to get your loans discharged. If you can’t, using options like the Income Sensitive Repayment plan may be an option.
Waiting too long can destroy your wealth.
Many seniors, burdened by a sense of moral obligation to their creditors, scramble to pay debts they really ought to be trying to discharge. They eat into their already meager 401K plans, they take on second and third jobs, and they tend to get further behind in spite of all these heroic efforts. This is a phenomenon known as being in the debtor’s “sweat box.”
The sweat box is particularly dangerous for seniors. Thanks to ageism, a senior’s earning capacity tends to drop over time. Health issues can also make it impossible to handle a demanding, high-paying job. Seniors typically need all the wealth they can keep, and what’s more, bankruptcy exemptions make it possible to keep it. Meanwhile, your indifferent creditors will happily gobble up every dime you send them.
If you’re in this situation, don’t wait. Contact the experienced family law attorneys at Sadek and Cooper today. Our free consultation and payment plans for bankruptcy filers will help you preserve and protect your ability to stay afloat during your golden years.