When people in Illinois and across the United States reach retirement age, they are expecting to live their golden years free of financial worry. The objective to relax, take vacations, spend time with family and friends and not think about financial issues is a noble one. Unfortunately, it is growing increasingly difficult to make a reality. The current health crisis has exacerbated these challenges, but for many years, elderly people were increasingly facing financial hardship, escalating bills and the lack of assets to pay them. It is important for those who are confronted with financial worry to know they have options.
Debt is growing for various reasons among elderly people
More and more elderly people who do not have significant retirement income and savings are relying on risky strategies like using credit cards to make ends meet or taking out lines of credit on their homes. This is a tactic that leaves them in a precarious situation if they are suddenly confronted with a massive bill. In a short amount of time, they might exhaust their credit and have payments due with no reasonable way to pay them. Other problems that have come up to escalate debt include helping children and grandchildren make ends meet or co-signing for student loans. Risky investment strategies have also contributed to the budget crunch.
Statistically, there has been an increase in bankruptcy filings among older people – and this was before the pandemic. A study indicates that one out of eight people who file for bankruptcy is at least age 65. That number of filers is five times what it was 25 years ago. Most report that they had reduced income and their medical expenses rose significantly. With bankruptcy, they could clear certain debts and remain in their home.
Bankruptcy is a viable alternative
People who have paid their debts all their lives might be under the impression that bankruptcy is a tactic shun responsibility. In truth, it is a perfectly reasonable and legal strategy to get into a better financial situation. Depending on the circumstances, a Chapter 7 or Chapter 13 could suit the debtor’s needs.
Chapter 7 is a liquidation and will clear all unsecured debt – including medical expenses – in exchange for the surrendering of certain properties. People might keep their home and car in a Chapter 7. Chapter 13 is a payment plan to be made over three or five years. This allows the person to retain property if payments are made on time and in full. Before dismissing the value of bankruptcy, it is wise to get the facts about it. A firm that understands all types of financial challenges can help with debt relief through a bankruptcy filing.