Debt and retirement: Financial problems leading to bankruptcy
As a person starts to get older, he or she might start thinking more seriously about retirement. The individual may work with financial professionals to ensure that the plan put in place will meet his or her needs in the future.
However, even the best plans can experience problems when unexpected events arise, such as the loss of a job or an untimely illness. These events can lead to severe financial hardships, which could eventually force the individual to file for bankruptcy.
A report by Demos and the AARP's Public Policy Institute examined debt carried by individuals over the age of 60. The study determined that many older individuals are incurring additional debt at the worst possible time, which is right before retirement. This means that there is a shorter time to repay what they owe, leading to individuals needing to delay retirement plans.
One of the main causes for the financial problems is credit card debt. The study learned that individuals over the age of 50 carry an average of $2,000 more of credit card debt than those under the age of 50. This debt usually results from people using credit cards to pay medical expenses for unexpected health problems.
People who have high credit card debt do have some options that are available to them. They may try to work with the credit card companies to reduce the amount that they owe, but there is no guarantee that the companies will be willing to agree to these arrangements. Also, if the companies reduce balances, the individual may have to pay taxes on the amount of debt that was forgiven.
Filing for bankruptcy also may help individuals struggling with credit card debt. Once a person files for bankruptcy protection, all collection actions will be stopped due to the automatic stay. This gives the person time to create a bankruptcy plan that allows them to address the financial challenges that they are having.
Many people are concerned about what will happen if they file for bankruptcy, because they believe that they may lose their home. This is especially worrisome to elderly individuals, who not only own their home but may have considerable equity in the property. A person will not necessarily be forced to sell assets when filing, and in fact, may be able to keep most of their property.
If you are having difficulty making ends meet, speak to an experienced bankruptcy attorney about what you can do to improve your financial situation. An attorney can discuss your specific goals with you, and help you find the best solution to your current problems.
Whether it is filing for bankruptcy protection or considering other debt relief options, you need to know what options are available to you. By taking the time to learn more about these options, you make the choice that will help you achieve your financial goals.