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As the senior population in the U.S. continues to grow, more elderly individuals are facing financial hardship, often turning to bankruptcy as a solution. Many seniors live on fixed incomes with rising expenses, while also carrying significant debt—mortgages, credit cards, medical bills, and even student loans for their children or grandchildren. At Sigal Law Firm, we help elderly clients navigate their financial challenges and explore bankruptcy as a powerful tool to preserve their assets and secure their future.
Why Are More Seniors Filing for Bankruptcy?
Several factors have led to an increase in bankruptcy filings among older Americans, including:
- Fixed Income & Rising Expenses – Social Security and pensions often do not keep up with inflation, making it harder to afford necessities.
- Medical Debt – Many seniors face high healthcare costs, even with Medicare coverage.
- Credit Card & Mortgage Debt – Some seniors carry significant credit card balances or mortgages into retirement, creating financial strain.
- Student Loan Debt – Older Americans increasingly co-sign loans for their children or grandchildren, sometimes leading to garnished Social Security benefits.
- Longer Life Expectancy – With people living well into their 80s or 90s, retirement savings are often depleted faster than expected.
How Bankruptcy Can Help Seniors
Many seniors hesitate to file for bankruptcy because of concerns about their credit score or stigma, but in reality, bankruptcy can be a lifeline for those struggling to make ends meet. Here’s how it helps:
Chapter 7 Bankruptcy for Seniors
- Eliminates Unsecured Debt – Wipes out credit card balances, medical bills, and personal loans so seniors can use their income for essentials.
- Protects Retirement Savings – IRAs, 401(k)s, pensions, and Social Security are protected in bankruptcy, allowing seniors to keep their hard-earned savings.
- Stops Debt Collection Harassment – Creditors and debt collectors must immediately stop contacting you after filing.
🔹 Example Case: Betty & Fred
- A retired couple in their 70s had a $1,950 monthly budget shortfall, which would exhaust their IRA in 8.5 years.
- By filing Chapter 7, they eliminated $60,000 in credit card debt, reducing their shortfall to $450 per month and extending their IRA to 37 years, ensuring financial stability.
Chapter 13 Bankruptcy for Seniors
- Helps Save Homes – If a senior is behind on their mortgage or property taxes, Chapter 13 stops foreclosure and creates a structured repayment plan.
- Manages IRS or Student Loan Debt – Though student loans are difficult to discharge, Chapter 13 can help reduce monthly payments while the debtor remains in a structured plan.
- Protects Assets – If a senior has non-exempt property that could be taken in Chapter 7, Chapter 13 allows them to keep their assets while restructuring debt.
What Happens If a Senior Dies During Bankruptcy?
- Chapter 7: The case continues even if the filer passes away, and the discharge is granted, protecting assets from creditors.
- Chapter 13: The court may dismiss the case, continue the repayment plan, or convert it to Chapter 7 based on the circumstances and financial impact on surviving family members.
Why Sigal Law Firm?
At Sigal Law Firm, we understand the unique financial challenges facing seniors. Whether you need to eliminate debt, stop foreclosure, or create a repayment plan, we will provide compassionate, strategic, and personalized guidance.
If you or a loved one is struggling with debt in retirement, don’t wait until it’s too late. Contact Sigal Law Firm today for a free consultation and let us help you protect your future.
