Many older debtors in Kentucky may consider filing for bankruptcy because of their substantial medical debt, and they would not be alone. Medical debt is the top reason for personal bankruptcy filings in the country. People who are 65 years or older file almost eight percent of bankruptcies, an increase of one percent in 2008.
There are multiple factors that have contributed to the increase in older bankruptcy filers. One reason is that the 2008 recession significantly impacted the financial resources of that age demographic. Another is that wives are living longer than their husbands and may not have the financial knowledge to properly manage the family’s finances. Also, bankruptcy may be the only response to creditors who, in some states, are able to collect as much as 25 percent of the disposable net income a debtor earns.
One bankruptcy attorney states that health care expenses are the reason she has an increase in clients who are 50 years old and older. She states that the restructuring of the United States bankruptcy code that was executed by Congress in 2005 failed to lower the number of bankruptcy filings as intended. Instead, it made the process costlier, more complicated and more time-consuming.
Another issue for elderly debtors are debt collectors, who can be dishonest. The Consumer Financial Protection Bureau found that the service or product consumers over the age of 62 complained about the most were debt collectors.
Individuals who have substantial debt that they cannot pay may speak with a bankruptcy attorney who may assess their financial situation and advise them of their legal options. The clients’ debts and income will be used to determine if they qualify for Chapter 11 or Chapter 13 bankruptcy. Clients will be advised what type of debts may or may not be discharged.