Who Files For Bankruptcy The Most?

Traditionally, almost all bankruptcy debtors were under 65. That’s still true in a majority of cases. But the over-65 filing rate has tripled since the 1990s. High medical bills are the primary reason for this increase. Chronic illness treatment, like cancer treatment, could cost more than $10,000 a month. Health insurance, including Medicare, usually only covers part of these costs. Most people over 65, like most people in general, barely make ends meet. They simply cannot afford this additional expense.

The same bankruptcy laws apply to everyone, regardless of age. However, when people over 65 file bankruptcy, a Chicago bankruptcy lawyer must be aware of some special emotional and financial issues. These special issues could apply in a Chapter 7 or a Chapter 13. Most people with high medical bills file Chapter 7. This form of bankruptcy quickly eliminates medical bills and other unsecured debts. A Chapter 13, which is basically a repayment plan bankruptcy, could be more appropriate in some cases.

Emotional Issues

For years and years, big banks and other big lenders have pushed the myth that people who file bankruptcy are failures. That may be the case in Monopoly, a game that many over-65 folks grew up playing. Players who declare bankruptcy in this board game automatically lose, and there is no way they can get their thimble, iron, or whatever game token they used back on the squares.

In the real world, filing bankruptcy is more like going to Monopoly jail. Players stay behind the metaphorical bars for, at most, a few turns. Then, they go back to Go. After about ninety days of on-time payments, especially in a Chapter 13, it’s pretty much business as usual for most debtors. When they apply for loans, their options are limited and expensive. However, the banker rarely says no.

That being said, bankruptcy is a big financial step backwards. Nevertheless, the pros of filing a necessary bankruptcy greatly outweigh the cons.

These pros include the Automatic Stay, asset protection, and debt discharge. The Automatic Stay, which is in Section 362 of the Bankruptcy Code, prohibits most creditor adverse actions, such as wage garnishment and foreclosure. Speaking of foreclosure, bankruptcy also protects your house and other important assets from creditor seizure. We mentioned unsecured debt discharge above. Other unsecured debts include credit card bills and payday loans. Some other unsecured debts, like back taxes, are dischargeable in some situations.

Financial Issues

Protecting financial assets is one of the best reasons to file bankruptcy. Outside bankruptcy, your assets are at risk. But bankruptcy protects assets that mean a lot to older Illini, such as:

• House: Many people over 65 have a significant amount of home equity. To overcome the limited Illinois home equity exemption, many Chicago bankruptcy lawyers adjust a home’s value to reflect an as-is cash offer. Most home investors only offer pennies on the dollar. That figure is an accurate representation of a home’s value for bankruptcy purposes.
• Retirement Account: Frequently, a retirement account is the largest financial asset in an over-65 bankruptcy. The Supreme Court recently ruled that IRAs, 401(k)s, and other nest egg accounts are fully exempt in bankruptcy. That’s an important ruling, since these accounts are tempting targets for creditors who are owed money.
• Government Benefits: A significant number of people mostly, or almost entirely, depend on Social Security and other government benefits to make ends meet. These assets, even if they arrive in monthly allotments like income, are exempt assets in a consumer bankruptcy case.

Other protected assets in an Illinois bankruptcy include personal property and motor vehicles. Generally, only luxury items, like yachts and vacation homes, are nonexempt. Even so, the trustee (person who oversees a bankruptcy for a judge) may not be able to seize the item. Frequently, the liquidation doesn’t benefit the creditors financially. That’s especially true if the asset is difficult to sell and/or needs work. 

Work with Savvy Cook County Lawyers

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.

Source:

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