Are Bankruptcies on the Rise in 2024?

The overall number of consumer bankruptcy filings increased in 2023, for the first time in a very long time. However, the number of over-65 bankruptcies (gray bankruptcies) has risen almost every year since 1991. The combination of a shrinking social services safety net and increasing medical bills has caught many older adults in a vise grip. These bankruptcies have some special financial and emotional issues, as outlined below.

High medical bills and other financial storms could sink any ship at any time. Therefore, even people over 65 often need a fresh start, which is what bankruptcy provides. A Chicago bankruptcy lawyer helps families take full advantage of this fresh start and everything it offers. An attorney also helps families maximize their fresh starts, so they can regain control of their finances and confidently move forward with their lives.

Financial Issues in a Gray Bankruptcy

Bankruptcy offers protections like an Automatic Stay that stops creditor harassment, such as medical bill collection lawsuits. Bankruptcy also protects the assets most important to many people over 65, such as:

• Retirement Account: A 401(k), pension account, IRA, or other retirement nest egg has an emotional value that often exceeds its financial value. Given the considerable value of many accounts, that’s saying a lot. Long-term savings accounts are 100 percent exempt in bankruptcy. They’re safe from the aforementioned lawsuits and all other threats.
• Government Benefits: Many older people rely heavily, or even exclusively, on Social Security benefits to make ends meet. Like retirement accounts, these government benefits are exempt in bankruptcy. This exemption also applies to VA disability, workers’ compensation, and most other government benefits.
• Property Equity: This exemption is a bit more complex, because it’s limited to $15,000 (or $30,000 if the owners jointly file). Many people have more equity in their homes than that. Fortunately, a Chicago bankruptcy lawyer can use one of several loopholes to protect more equity, or even all of it.

The same exemptions apply in Chapter 7 and Chapter 13. Chapter 7 discharges medical bills and other unsecured debts in under a year. Chapter 13 gives families up to five years to catch up on past-due secured debt payments, like home mortgage loans.

Emotional Issues

Everyone faces emotional issues when filing bankruptcy, regardless of their age. The emotional issues are different, and often more challenging, for people over 65. The nature of bankruptcy is a good example.

Many older people have played lots of Monopoly over the years. When players declare bankruptcy in this board game, they admit defeat and they’re unable to resume playing.

A real life bankruptcy is different. As mentioned, bankruptcy is a fresh start. In other words, people who file bankruptcy move their thimbles or other tokens back to the Go square. Then, other than the fact that they don’t collect $200, they keep playing the game as before.

Additionally, in a real-life bankruptcy, people don’t lose their property, at least in most cases. In fact, also as mentioned above, the consumer protection and debt discharge provisions in a bankruptcy might be the only way to retain the property people have worked a lifetime to acquire.

 Reach Out to a Savvy Cook County Lawyer

No matter what kind of financial problem you are having, bankruptcy could be a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. The sooner you reach out to us, the sooner we start working for you.

Source:

nytimes.com/2018/08/05/business/bankruptcy-older-americans.html