Is Bankruptcy a Good Option for the Elderly?
The Elderly and Bankruptcy Filings!
Between the years of 1991 and 2007 seniors were overwhelmed by debt and in response began filing bankruptcy. Filings went up by 150%. The Consumer Bankruptcy Project found that among seniors aged 74 to 84 bankruptcy filings increased by a whopping 433%!
Many elderly become impoverished through medical bills, increased property taxes and/or inflation. Since most elderly are on fixed incomes inflation is particularly detrimental to them. Inflation is a hidden tax that causes prices to go up in response to the increase in printed fiat money which devalues the dollar. People on fixed incomes have no way to counter this hidden tax. As expenses mount the reliance on credit cards rise. Considering some of these scenarios is it a good idea for the elderly to file for bankruptcy or is there another way?
If you are elderly, and live off of social security and a pension, these sources of income are untouchable by creditors and you would be considered judgment proof making bankruptcy unnecessary. All you have to do to be relieved of your unsecured credit card debt is to simply quit paying it!
Do NOT file Bankruptcy!
Furthermore, chapter 7 bankruptcy allows the confiscation of personal property, while a judgment does not. And while filing bankruptcy can cost thousands of dollars and involves a lot of paperwork, stopping the payments on your credit card bills costs nothing.
Many elderly are tempted to consider bankruptcy because they think that credit card debt will be passed on to their relatives after they die; this is not true in most cases. If the credit card debt is in their name alone the credit card company cannot go after anyone else after the debtor dies. The collection agency can sue the estate however. So if there is anything that is of value it would be advisable to consult with an attorney in order to protect those assets. If those assets are substantial then it might be in your best interest to go ahead and file bankruptcy. Additionally, if the decedent lives in a community property state assets are considered joint property and so are debts. So it is possible in a community property state that one spouse could run up a credit card and at death the other spouse would be liable. States that employ community property, as of this writing, are Alaska, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Also, if one owner of a co-signed credit card dies the other automatically becomes responsible for the debt. The lesson here is to never co-sign a credit card!
How to become free of debt!
If a bank account has only social security funds and less than two times the monthly amount in the account then a bank levy cannot be done. In other words your money cannot be touched in your bank account if you have less than 2 times your monthly social security check.
How to stop harassment by Collection Agencies
Moreover, harassment by collection agencies can cause undue stress on the elderly. Many are unfamiliar with their rights and believe the lies the collection agencies tell them. A Cease and Desist Letter will stave off threats and use of a cell phone to screen calls will take care of any harassment. I know one person who owed over $10,000 he fit the requirements and was completely judgment proof. He send certified letters to all his creditors and was NEVER contacted via phone. In other words he was off the hook and free from his debt. He was on social security and had a small pension and owned nothing but a personal, older vehicle.
If a collector calls, simply do not answer the phone or speak with the collector. Also, if it is past the statute of limitations the collection agency can no longer sue for the debt. See my other article on the statute of limitation on debt for your state.
In closing, unless there are substantial assets that need to be protected bankruptcy is usually not the best option for the elderly. The best option is to simply quit paying on the unsecured debt and let it go into collections. There is really nothing the collection agencies can do except to call over and over again. Once a cease and desist letter is sent, disconnect the land line and have your elderly friend or parent simply not answer the cell phone unless they know who is calling. Eventually the calls will subside and they will be free!
Even if the collection agencies decide to sue, which they more than likely will not do once they see that the elderly person is judgment proof, the worst that can happen is that a judgment will be issued against them and their credit rating will suffer.
Finally, make sure that your friend or parent is counseled on how much money they have and how much they can spend. It might be necessary for you or a brother or sister to take over the financial responsibilities when they can no longer manage them. Moreover, the elderly are particularly susceptible to scams and con artists. Since the elderly are prey to unscrupulous people, and in order to avoid problems it would be a good idea to watch over their finances regardless of their financial situation.
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- Stop Collection Agencies Cold! Make them Validate the Debt!
- Read this BEFORE you file for BANKRUPTCY! Know the Statute of Limitations on Credit Card Debt!
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