Guide to Surviving the Bankruptcy Process
Managing Debt for Elderly Clients
Jim Bowser | July 14, 2010
Spiraling debt issues can become problematic for people of all ages, but especially so for senior citizens. Without a steady income, retirees can get into serious trouble if credit card bills and other debts begin stacking up.
The best option for seniors faced with a mountain of seemingly insurmountable debt is oftentimes to file for bankruptcy. According to Jim Bowser of Bowser & Associates, P.L.C., a bankruptcy lawyer who handles Chapter 13 and 7 cases for clients in Mt Clemens, Michigan, bankruptcy is a viable option for people who are both in their younger years and their older years.
Bowser tells us that living on a fixed income can sometimes become difficult for people, especially if they have accidentally overextended themselves and are now beginning to try and pay back those debts. Rising healthcare costs are an issue facing many elderly people today too, and it is not unheard of for someone to be forced into filing for bankruptcy due to medical bills that are simply too much to pay. When a person does not have a health insurance plan that pays for 100% of his or her medical costs—or even if the person has no healthcare coverage whatsoever—just one seemingly innocuous trip to the doctor can end up costing far more money than the person can ever pay off. “Health care costs can get out of whack as people get older,” Bowser explains.
Other times, older people may have taken out loans or used credit cards to make large purchases while thinking they would have a few more years in the workforce to pay those bills off. When unexpected issues arise that force someone into an early retirement, however, paying those bills off while living on a fixed income can suddenly seem like much more of a challenge.
Although there are countless ways that a senior citizen can get himself or herself into financial trouble, there is one way that has become more common than anything else when it comes to getting out of that debt—filing for bankruptcy. Whether the person is filing for a Chapter 7 or a Chapter 13 bankruptcy, a lawyer should be able to look at the case and determine which course of action will work best.
Rather than using social security benefits or unemployment funds to pay off debts, retirees can file for bankruptcy feeling confident that the money that they have left in their accounts will not be garnished. “Generally speaking, social security benefits, veterans benefits, and unemployment compensation cannot be garnished by any creditor whatsoever,” Bowser says. “And that is even after it has been put in a bank account.”
There are other types of accounts, however, that can be garnished by creditors. Bowser says pensions and money from part time work can legally be garnished by creditors in some cases, as can the equity that the debtor has built up in his or her home. Despite the few downsides, Bowser says most older debtors still choose to enter bankruptcy rather than have those debtors looming overhead. “The biggest thing is peace of mind,” he says.
Even if the debtor is what’s known as “judgment proof,” meaning that it is unlikely that a judge would garnish the person’s social security benefits to pay back the debt, he can still be on the receiving end of constant phone calls from collections agency, which can become burdensome to many. Debtors of any age can also be sued by creditors for missing payment deadlines, and they may be required to go to court to testify about their assets. These are all reasons why Bowser says 70% of the senior citizens he speaks with who are in over their heads with debt decide to go ahead and file for bankruptcy.
In general, judges in bankruptcy court tend to be very helpful with elderly clients filing for Chapter 7 or Chapter 13 bankruptcy in Mt. Clemens, especially when they are escorted by a lawyer who has experience in the field. Federal court buildings are usually handicap accessible, making it relatively easy for the elderly to get around as well.
Rarely, Bowser will have a scenario where a debtor ends up passing away while his bankruptcy case is ongoing. Bowser says that this recently happened with a debtor who passed away shortly after he filed the case, and that the court allowed the deceased debtor’s power of attorney—who was his son—to complete the bankruptcy on his behalf and get rid of the estate’s debt.
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. Publication of this article and your receipt of this article does not create an attorney-client relationship.
Please review our site and see what we may be able to offer you.
Call Us Today! 810-329-3500
