The number of seniors who are filing bankruptcy in Maryland and across the country has been rising starkly in recent years. In most of the cases, the seniors filing for bankruptcy protection made less money than the population at large. Among senior households that filed for bankruptcy during the year 2016, 78% had less than the median annual income. In that year, bankruptcy filings by people 65 years old or older accounted for 12% of the total filings; that figure in 1991 was only 2%.
There are a number of factors that have led to the increase in bankruptcy filings by older Americans. Wages have remained steady despite increases due to inflation, unions have lost power, and pension plans are less reliable. The rise in the cost of medical care, too, has significantly impacted the financial standing of older Americans, who need health care more often than their younger counterparts. Another major factor is the increase in financial predators, who market credit cards and other debt instruments to seniors even after they’ve just filed bankruptcy.
According to a report by the U.S. Federal Reserve, 60% of elder households were carrying debt in 2016, which represents an increase of about 50% over 25 years. Many seniors are filing for bankruptcy protection not because it is necessary but because they want to take advantage of bankruptcy’s automatic stay to stop creditor harassment.
Senior citizens and others in Maryland might want to talk to a lawyer about their options to reduce or eliminate debts. A lawyer who has experience practicing bankruptcy law might be able to help by examining the facts of the client’s situation and drafting the necessary legal documents. In many cases, a Chapter 13 bankruptcy will allow a person to pay down their debts with their current income over a period of three or five years while eliminating or reducing some outstanding balances.