Many people think of retirement as a free pass to do whatever you want. You do not have to work anymore, so you can travel, spend time doing your favorite hobbies, visit family, and do whatever your heart desires. But to do pretty much anything in life, you need one main thing: money.
Not everyone who retires has an endless supply of money in the bank. Many have no pension or retirement account. They are living solely off Social Security income. On top of that, many have tens of thousands of dollars in debt.
In these situations, the common course of action is to opt for bankruptcy. But what if you are older and retired? Is filing for bankruptcy still your best bet?
Bankruptcy is meant to be a last resort for those who want to wipe out debt and start fresh with a clean slate. But what if you are an 80-year-old senior living on a modest income? It may be better to just die with debt.
Consumer debt is on the rise, and seniors are not immune from it. Age is not recorded in bankruptcy filings, but the Consumer Bankruptcy Project has been compiling bankruptcy statistics for more than a decade. The statistics show that people over the age of 65 are making up an increasing share of bankruptcy filings. They currently account for around 13% of bankruptcy statistics, and that number is growing. Of the filings examined, the mean age of older filers was 70, while the oldest filer was 92 years old.
This group averaged more than $100,000 in debt. Some people owe more than they make on Social Security, forcing them to file for bankruptcy. Of those studied, the median income was $37,000 and they had unsecured debt that was more than a year’s income.
While bankruptcy can eliminate debt and stave off creditors, it is not a cure-all. You will likely be forced to liquidate assets to pay off creditors. Plus, filing for bankruptcy costs money — often more than what a retiree can afford.
But if you die in debt, you will not have to pay anything. If you die, you will not personally face the stress or consequences of debt. Also, certain debts, such as credit card debt, personal loans, and medical debt, are discharged upon death. At most, your estate may have to pay off these debts, but they will not pass on to surviving family members unless they have co-signed your debts.
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Financial crises affect those of all ages. Even seniors who are supposed to be living it up in retirement are often having to watch their expenses due to a lack of money.
What are your financial options for getting rid of debt once you are retired? Seek legal help from Adam M. Freiman. Stop creditor phone calls, garnishments, foreclosures, and lawsuits with our help. Fill out the online form or call (410) 486-3500 to schedule a consultation.
