The number of senior citizens who have filed for bankruptcy has risen dramatically. According to The New York Times, although the number of older Americans has increased about 500%, about 12% of those are now seniors. In 1991, seniors represented just 2.1% of filers, representing a nearly 10-fold increase in less than three decades.
Why are senior citizens more likely to need a Los Angeles bankruptcy attorney than ever before? There are many personal factors that can impact someone’s standard of living after retirement. While saving up seems like a solution, many retirees don’t have enough set aside and any obstacle can set one up for bankruptcy. Some of these you may have control over, others you don’t.
Most Common Causes of Bankruptcy for Seniors
- Cost of Health Care: A major illness can rack up expenses that lead to bankruptcy. Many seniors resort to using credit cards and loans to pay for treatments. Add to that the costs of medical treatments and prescription medications, and the fact that Medicare doesn’t always cover everything.
- Disability: The odds of becoming ill or disabled, leaving one unable to work, are higher the older a person is. Even if a senior has a plan to continue working, that plan may fall through and their debts will continue to mount up.
- Fixed Income/Pension: Seniors with a fixed income don’t have the flexibility to pay out of pocket for emergency expenses. Two out of three seniors may file for bankruptcy due to credit card debt, according to a University of Michigan study. To top it off, fewer companies are offering pensions; even those who get a pension may find when pension funds are combined with Social Security, basic living expenses still aren’t covered.
- Scams: Scammers frequently target seniors, exploiting their lack of computer savviness to obtain passwords, bank information, and other sensitive details. The fine print of a contract may be difficult to understand. A targeted scam can result in losing one’s bank savings or a foreclosure on their home. Losing one’s financial safety net puts them at risk of bankruptcy.
Government Benefits and Senior Finances
Other factors are threatening the financial security of seniors as well. The seniors of the future may face problems with Social Security, which is expected to cover fewer and fewer benefits past 2034. Medicare’s hospital insurance trust fund is expected to run out much sooner. By 2026, only 91% of Medicare Part A costs may be covered, by 2018 estimates. That’s three years sooner than predictions made in 2017.
With the number of senior households in bankruptcy rising, and expected to increase, these factors only add to the strain. Seniors who haven’t filed for bankruptcy are experiencing rising debt levels as well, so the financial burden is affecting a broader population than the clients who retain an Orange County bankruptcy attorney.
OakTree Law: A Trusted Los Angeles Bankruptcy Attorney
OakTree Law offers several bankruptcy solutions (Chapter 13, Chapter 7, or Chapter 11). In addition to putting foreclosure on hold, protecting possessions, or wiping out or helping one pay off debt, we can help clients benefit in other ways from bankruptcy. We can advise you on the best options, so you can make the best financial decisions possible. Our team can inform you on bankruptcy exemptions, dischargeable debts, and life after bankruptcy.