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Discussing Bankruptcy With An Older Relative

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Just because a relative is older and living on a fixed income does not mean that he or she is also debt-free.  Many older Americans struggle each month to pay unsecured debts from very modest incomes.  The most common forms of unsecured debts are credit cards and medical expenses, and for many of our elderly even a small unsecure debt can be a big financial complication.  Some face the difficult decision to cut back on food, prescription medicine, or home utilities in order to make minimum payments on these debts. 

Many of our elderly try to avoid bankruptcy because they believe that they can pay their obligations with minimum monthly payments.  The unfortunate truth is that it takes many years to pay off even a small high interest debt with minimum monthly payments.  In the meantime a changed interest rate and annual fees can cause that minimum payment to increase.  Additionally, forgotten payments can lead to creditor harassment or lawsuits which can result in a real estate judgment lien and/or an asset seizure. 

Discussing personal bankruptcy with an older loved one can be difficult.  In many cases there is great concern over losing property or income.  The federal bankruptcy laws have changed significantly over the past fifty years and offer great protections for the elderly.  For instance, retirement income and social security are protected from creditor garnishment during bankruptcy.  In most cases all of the bankruptcy debtor’s property is exempt from turnover; however your bankruptcy attorney can discuss any property that may be at risk.  The bankruptcy laws offer many options for retaining property and discharging debts.  After the typical case the unsecured debts are discharged and there is more money available to pay necessary living expenses. 

Another common concern is the embarrassment of bankruptcy.  A personal bankruptcy is usually a very private legal process.  Friends and family are not contacted and bankruptcy cases are not published in the newspaper. Only creditors and co-debtors receive notice of a personal bankruptcy.   

If an older relative is struggling with debt, discuss the situation with an experienced bankruptcy attorney.  The federal bankruptcy laws contain many protections that shield the assets and incomes of the elderly while discharging burdensome creditors.  Don’t let the stress of credit cards and medical bills tarnish your loved one’s golden years.

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