New York Estate Planning & Elder Law Blog
Seniors 65-years and older now make up 8 percent of those filing for bankruptcy across the country, up from 7 percent a decade ago. Much of that increase is due to the burden of crippling medical debt older Americans are struggling with. Furthermore, a combination of the 2008 recession and state laws that allow creditors to garnish as much as 25 percent of an individual’s disposable income left many Baby Boomers in financial dire straits.
One of the other reasons for the increase in bankruptcy amongst older Americans may the attributed to the rise in credit card use by seniors. With less people relying on pensions, decreased retirement benefits, and rising healthcare costs, more and more people are relying on credit cards to pay their bills and put food on the table. Sadly, social welfare programs like Social Security and Medicare do not cover all of an individual’s cost of living and health care needs as Americans are living longer and longer.
Even worse than the financial hardship can be the emotional toll many experience as they navigate through a complicated bankruptcy process and deal with creditors calling day and night to recoup a debt. A report from the federal Consumer Financial Protection Bureau found that debt collection was the most-complained about product or service for consumers over 62.
Oftentimes, wives are left to shoulder the burden and face creditors after their husbands pass away as women statistically outlive their husbands. The combination of living alone and dealing with crippling debt is a scenario no one wants to deal with but is another unfortunate trend in the struggles our nation’s elder face more and more every day.
It is important to note that filing for bankruptcy can actually be a godsend for some who are simply unable to dig themselves out from unforgiving medical bills. Many older Americans who file for bankruptcy actually find their mental and emotional state improves after wiping the slate clean and ending what can be aggressive and sometimes illegal debt collecting practices.
To help offset unexpected medical bills, younger and older Americans need to think long and hard about their financial futures and explore the options that may be available to them. For some, it may be maximizing their contributions to retirement accounts like an IRA or 401(k) while for others it may be best to purchase Long-Term Care Insurance.