A person is never too old to make a fresh start when it comes to their personal finance. A growing number of older Californians are turning to bankruptcy to give them some breathing room in their golden years. According to an article by fool.com, financially responsible older Americans often view bankrupt as a prudent option with ever-increasing amounts of medical, credit card debt. In some cases, baby boomers who long to retire took on student loan responsibilities by co-signing with a child. In terms of statistics, 20 percent of total bankruptcy filings are attributed to people 55 and older. A study by debt.org points out gray bankruptcies have doubled since 1994. So, what are some of the factors that play into a bankruptcy in later life?
Getting a grasp on medical bills
Medical bills often plague retirees. As a retiree, you might assume Medicare will protect your finances. But there are a lot of gaps as Medicare does not cover long-term care and certain other medical expenses such as hearing aids. Also, many seniors can't keep up with the deductibles and copays as well as coinsurance costs. People over the age of 65 account for 34 percent of prescription drug usage, which is also an expensive dilemma. Personal finance experts recommend older adults use an emergency fund, but 32 percent of aspiring retires between the ages of 53 and 62 have no money in a rainy-day account.
Collecting social security during a bankruptcy
Many older people have the misconception that they can't declare bankruptcy if they also receive social security. But receiving income from social security does not stop you from filing Chapter 7 or Chapter 13 bankruptcies. If you opt for Chapter 7, you discharge most or all of your debts but that could mean giving up some property. It's critical to talk to a bankruptcy attorney in Southern California to decide what works best for you. With Chapter 13, people often get to keep their debt and keep their assets. However, it's difficult to pay back a plan if your only income is social security income.
If you want to retire with peace of mind, consider all of your options. At the Law Offices of James C. Shields, our clients come first. We specialize in bankruptcy, estate planning and probate. For more information about receiving legal support and bankruptcy advice in Los Angeles and Orange County, California, please contact us.