Bankruptcy is something that affects all age groups. Even senior citizens, who many people assume are more financially stable given a long working life and safety nets such as retirement accounts and savings, are vulnerable to the effects of overwhelming credit card debt.
There are many reasons why debt has a negative impact on all age levels, but it can hit senior citizens particularly hard. This is due to a variety of factors, including the lack of opportunities to earn wages to pay off debt.
Reasons senior citizens file for bankruptcy
A recent study by the Consumer Bankruptcy Project revealed a significant increase in older adults filing for bankruptcy, reports Indiana Public Media. The reasons that senior citizens file for bankruptcy do not vary widely from the reasons the rest of the general population files. In many cases, these people are in over their heads with credit card debt, and the payments and interest are too much to keep up with. Once monthly payments slide, it becomes harder and harder to catch up. When overwhelming debt is an issue, and getting a new job or an additional job to earn extra income to pay off debt is not an option, many senior citizens turn to bankruptcy as a viable option for a fresh start.
Types of bankruptcy filings
There are two main types of bankruptcy filings for consumers: Chapter 7 and Chapter 13. Chapter 7 is the most frequent personal bankruptcy filing. This type of filing offers a fresh financial start to those who use it. It allows people to wipe the slate clean from credit card debt, and often people use this type of bankruptcy to preserve their assets.
There are several myths surrounding bankruptcy filings that are important to clarify before dismissing bankruptcy as an option. For example, although many people believe that filing for bankruptcy will completely ruin their financial future, the opposite is often true. Missed payments will continue to damage a person’s credit rating, while a bankruptcy filing stops this process and helps a person begin the process of financial rebuilding.