Bankruptcy was once rare among older adults, but now people 65 and older account for 12% of personal bankruptcies compared to just 2% in 1991. Medical debts produce much of the financial hardship among older people in New Jersey as they grapple with dwindling incomes and depleted savings. Among those 65 and older who filed for bankruptcy, 60% of them cited high medical bills as their reason for seeking a discharge or reorganization of debts.
The bankruptcy trend among older adults was made clear in a report researched and written by a law professor. According to the report, the number of people age 55 to 64 seeking bankruptcy protection increased 66% from 1991 to 2016. People 65 to 74 experienced an enormous 204% increase in bankruptcies during the same period.
Concerns about rebuilding credit worthiness generally influence the decision to file for bankruptcy. With the right strategies, people have opportunities to recover from the bankruptcy that will linger on their credit reports for up to 10 years. The vice president from the National Foundation for Credit Counseling said that a bankruptcy has its greatest impact on a person’s access to credit during the first two years. If people make an effort to save at least 10% of their income and pay their bills on time going forward, they could restore their credit worthiness.
Legal advice might help a person understand options for debt management when considering bankruptcy. The ratio of a person’s income to debts determines which chapter of bankruptcy could apply to the case. A certain level of income might steer someone toward a Chapter 13 bankruptcy that reorganizes debts into a manageable payment plan. An attorney may be able to prepare the necessary financial disclosures for the court and attend to challenges that might arise from creditors during the process.