April 23, 2014

Senior Citizens and Bankruptcy: Special Considerations

fixed income bankruptcyOver the past few months, Susan Blum and I have been meeting with an increasing number of senior citizens and others on fixed incomes who are considering bankruptcy because of significant credit card debt.

It is not at all unusual for us to see seniors with over $100,000 in unsecured debt that has accumulated over years – sometimes 10 years or longer.  When fixed income investments and/or Social Security no longer throw off enough monthly income to pay the minimum payments, bankruptcy becomes a legitimate option.

Seniors, in particular, are often conflicted about filing bankruptcy because they came of age in an era when bankruptcy still had a social stigma and it was unthinkable not to pay one’s debts.  As a result, I sometimes see cases where a client has paid two or three times the balance due by making minimum payments but the outstanding balance has not really budged.  When I point this out, the stigma issue often disappears.

As a bankruptcy lawyer, my obligation is to advise my clients about their options under the law.  Bankruptcy is and has long been a legitimate financial tool that people can use to rid themselves of debt that they will never be able to pay.  I understand that there are moral questions that often arise when someone is considering bankruptcy and I understand and accept that for some folks, a straight bankruptcy just won’t sit very well.

At the same time, I have a professional and ethical obligation to advise my clients about both bankruptcy and non-bankruptcy options.  In my view, if filing for bankruptcy will eliminate excessive stress and allow a senior citizen (or anyone else for that matter) to achieve a little peace of mind and live with dignity, then I think the bankruptcy option should be on the table.

Usually, our senior citizen clients are carrying tens of thousands of dollars of credit card debt and the money to pay these debts has or is about to run out.  Sometimes, our clients have been so diligent in making payments that their adult children have no idea about the debt burden their parents have been carrying.  In fact, our clients’ adult children are usually the ones who call to make the office appointment.

As far as options, our advice runs the gamut from doing nothing and sending creditors “drop dead” letters, to filing Chapter 7, to filing a Chapter 13 reorganization.  Sometimes we have to wait because of recent credit card use, and sometimes, we can start bankruptcy protection immediately.

At a minimum, we can help our senior clients understand the bankruptcy and non-bankruptcy options better so they can make informed decisions.  Personal bankruptcy law is not particularly complicated but it does involve a lot of details and is very fact specific.  Additionally, there is a great deal of marginally correct or even incorrect information about bankruptcy on the Internet, and we find that bill collectors are all to happy to disseminate bad information as well.

If you are a senior or the adult child of a senior, I invite you to call attorney Susan Blum or myself at 770-393-4985, or email us by clicking on the link.  We do not charge for phone calls and we are happy to advise you about a difficult financial situation.

About

Jonathan Ginsberg practices consumer bankruptcy law in the Atlanta, Georgia area.

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