Debt certainly is not a new term to many Americans. In fact, it is rare to come across an individual in this country who has no debt at all. While the picture of the average American in debt is painted as someone who tried to buy a new home or extravagant belongings for her young family but can longer afford the lifestyle, the true portrait is actually very diverse.
Debt doesn’t discriminate against the young or the old, Drake Ozment says, and people from age 18 through 90 continually find that they need to file for bankruptcy to help with their debts. While younger debtors may attribute bankruptcy to divorce or poor spending habits, those over the age of 65 usually find that a different set of circumstances have led to their debts. For instance, Ozment says, the money they have saved for retirement combined with what they receive from Social Security is often not sufficient enough to live comfortably according to today’s standards. Trying to maintain their current lifestyles without the financial means to do so often leads to over-extended credit card debts. Additionally, when those factors are combined with medical needs and the abysmal housing market, bankruptcy becomes a necessary option.
When meeting with older clients who are no longer part of the workforce, Ozment, who serves as a premier bankruptcy lawyer in Palm Beach, Florida, says that they are often concerned about how filing for consumer bankruptcy will affect the money they have in their 401k or pension plans. However, he says, your pension is now your income, so the creditors can’t rob you of that security when trying to settle the debts that you owe. On the other hand, this money will be used in the means test to calculate how much money you have available each month — after your cost of living is subtracted — to pay back lenders and creditors. If you are filing for Chapter 13 bankruptcy, which most people with an income do, then your remaining income for each month will be used to fund your repayment plan.
Prior to submitting your petition for bankruptcy, regardless of your age, it is always important to get a clear picture of your assets, income, and how much you can expect to pay to creditors in order to resolve your debts. When you play an active role in your financial future, you will find that you experience fewer surprises and setbacks.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Neither publication of this article nor your receipt of this article create an attorney-client relationship.