Christopher Todd Morrison, P.C.
Affordable Bankruptcy
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Why bankruptcy filings are up for the elderly

Older Americans in Texas and throughout the country are filing for bankruptcy more often than they have in past years. Individuals between the ages of 65 and 74 comprise 8 percent of all bankruptcy filings. This is an increase of 1 percent since 2008, and many people in this age group are filing because of medical debt. In addition to higher health care costs, a lack of financial literacy may also play a role in whether an older person files for bankruptcy.

Those who have late or missed debt payments may hear from debt collectors. According to the Consumer Financial Protection Bureau, debt collection tactics were among the most common complaints of people over the age of 62. In some cases, an older person may find both emotional and financial relief by filing for bankruptcy. Some individuals have even managed to save their marriages because they were able to take care of their outstanding debts.

People who may feel guilty about filing for bankruptcy may find that the emotional relief of taking care of a debt may outweigh their negative feelings. In addition to putting an end to calls from collection agencies, a bankruptcy filing may put a stop to wage garnishment. In many states, an individual can have up to 25 percent of his or her wages garnished to repay outstanding debt balances.

Filing for Chapter 13 bankruptcy may make it easier to get a fresh financial start. As a general rule, creditors cannot touch IRA or other retirement benefits, which may be ideal for older folks. Chapter 13 bankruptcy also may allow individuals to keep property, such as a house or car. The repayment period lasts either three or five years, and during this time, creditors generally cannot take action, such as a foreclosure or repossession.

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