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Is Bankruptcy a Good Option for the Elderly?

Updated on January 31, 2016

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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    • profile image

      HELPS nonprofit 

      2 years ago

      Finally an article on the internet on this topic that is spot on accurate. My only comment is that credit card companies do not as a practical matter sue spouses in community property states where the other spouse is not signed on the card. Eric Olsen Executive Director HELPS Nonprofit Law Firm, Protecting seniors from collector harassment

    • ricktm1949 profile image

      Rick Maselli 

      7 years ago from Akron, Ohio


      Here is what happened. I did talk to two bankruptcy attorneys. This has been going on for a few months. The big problem is the large business loan that my brother and I signed personally for. Since my brother already filed bankruptcy and sold his home, with me wanting to keep my home, I really had no choice. Wells Fargo will file a suite and put a lien on my home for the entire amount of the loan, since my brother is off the hook now for the money. The only way to get them off my back is to file, and so I signed the papers Yesterday. I will be able to keep my home and cars, as long as I can still make the payments. But the main thing is that if I want to sell my home in a year or two, I can do that without worrying about a lien in which I would have to pay a large portion of the profit to Wells Fargo when my house sold.

      But what I did get to experience with all this is that as the credit card companies called and sent letters over the last several months, not only did they want to work something out, they did lower the amount I owed, as so many others said happened to them. The only exception to this was in fact, Wells Fargo. They will not work out anything, period, because they know they can come after my home. Without a home, this would not be as big of a problem.

      So, without that I would have waited it out with the credit card companies and I believe that would have worked out.

      Thanks for everything and I will be in touch.

    • Brie Hoffman profile imageAUTHOR

      Brie Hoffman 

      7 years ago from Manhattan

      Hi Rick:

      Sorry this has taken 4 days for me to respond, for some reason I wasn't notified. If I were you I would look into this further. From what I understand your home should be off-limits to credit card debt collectors. But, I am not sure so if I were you I would call a few bankruptcy attorneys and ask them for advice over the phone. There are a few out there that will give you the straight dope without trying to get your business. Call a few to make sure you get accurate advice. Doing this wont cost you a dime and you might just be able to avoid filing. I hope I am not too late in responding. Good luck.

    • ricktm1949 profile image

      Rick Maselli 

      7 years ago from Akron, Ohio

      Hi Brie,

      As you know we have spoken before and I agree with most of what you have been saying here. The problem for me is that I do have a home and a substantial business debt that I signed personally for, that is hanging over my head or should I say my home. I have done all the math and considered not filing bankruptcy, but because of my assets, I really have no choice. If it were not for my assets, I would probably not file and ride it out with the credit card companies. I am on Social Security and have my own bank account. I have made sure that any joint debt that my wife and I had credit card wise, we have no longer. So she is not going to have to file. All the debt in question here is in my name.

      So, I am supposed to sign the papers next Tuesday and begin the process. In some ways, I don't want to do this, but in others, I know that the business debt will be gone and I will still have my home without a lien being filed or other problems.

      So, I thought, just one more time, I would ask you if you have any other ideas or options you can think of before I take the plunge.

      Thanks for all you do for so many people and for information that is worth so much.

      Take care, Rick

    • Brie Hoffman profile imageAUTHOR

      Brie Hoffman 

      7 years ago from Manhattan

      I hope so.

    • profile image


      7 years ago


      I believe we worry a bit to much about retirement, this country has the resourses to change what needs to change when the time comes. Simply because they along with the rest of us are aging also...granted some or most of our elderly which will soon included millions of us aren't as wealthy as others but that applies to all in a capitalist society, I honestly believe that we will be taken care of in the end simply because one thing this country has is an image to maintain, and they don't want that image tarnished to the point where people around the globe see hold they were abandoned by by a government by the people for the people thing. Tey'll come up with something beside there are some true and honest people with power and funds that will make them make the difference or they will pull out what ever fundings they have that keeps these maggots in power. See in between all the lies and politics is greed, however greed has it's limits and that is the people that fund their greed for their desire for power which in my eyes is really what these or most of these people are about. So when push comes to shove they will make the move because they will be left with no other choice.

    • Brie Hoffman profile imageAUTHOR

      Brie Hoffman 

      7 years ago from Manhattan

      I know, that's why its important to try to get "bill" free asap and to make plans. Unfortunately, the old plans are now defunct. So we have to address the new rules and do what is in our best interest; otherwise we will suffer. Thanks for commenting jfay2011.

    • jfay2011 profile image


      7 years ago

      It's a scary world now. So many of us become worried about where we will be at that age.

    • Brie Hoffman profile imageAUTHOR

      Brie Hoffman 

      7 years ago from Manhattan

      Very good info Mike..thanks for helping me spread the word. Please feel free to repost this link on facebook.

      And thank you too GClark.

    • GClark profile image


      7 years ago from United States

      This is a great article with extremely useful information at a time when many people; especially the elderly, are suffering and are also the most likely to be intimidated.

    • MikeNV profile image


      7 years ago from Henderson, NV

      If you deposit $100 in the bank they take it and enter $100 as an Asset in their books.

      Because if Fractional Reserve Banking only 10% of your $100 remains at the bank ($10 is kept on reserve). The other $90 is now loaned. Guess what happens. The bank enters $90 on their books as an Asset.

      So the bank now has $190 of assets! $90 of money was created from absolutely NOTHING! Magic.

      So when the person who holds the loan defaults on the loan the bank "loses" $90... right? Uh mmm. Sure. That's what they want you to think.

      This is the PROBLEM with Fractional Reserve Banking. This "New" money is the INFLATION or the HIDDEN TAX that you speak of.

      When this "New" money hits the market the result is INFLATION because it devalues the buying power of the existing currency.

      People who need to file for Bankruptcy should do so. There is no shame in it at all. Businesses do it all the time. I'm not suggesting people intentionally try to get out of obligations, but the reality is our monetary system is based on a complete and total lie.

      All the power lies in the hands of Bankers who do NOT work... they take from those who do work.

      You would think that with all the excessive fees they charge that would be enough. After all what do they really do? They take YOUR money then charge people to use it. The cost of the Bank is very small... a handful of employees and a few computers, leased office space. That's it. Not cost of goods, no inventory, not much of anything. Banking is a huge profit business. But those Executives and Shareholders have to be millionaires at YOUR expense.


      Unsecured Debt is just that. They can sue you, but so what? If you have nothing they still have to collect even if they get a judgment. And there are many exemptions... there really isn't much they could ever take from a poor person.

      If you get bills in the mail you can't pay... throw them away. If they keep calling disconnect the phone and get a cell phone and don't give out the number.

      It's truly pathetic that the Elderly are in a position where they get harrassed. What a country.

      I'm voting your hub up because all the points you make are valid. One thing to consider is that outside of large populated areas like NYC the cost of Bankruptcy can be very very low. There are lawyers willing to do the whole thing for about $750. A lot of the real cost of Bankruptcy is imposed by the courts with ridiculous filing fees.


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