Many times bankruptcy is the best option for seniors with large debts.
Towson, MD (Vocus) June 12, 2010
In the last ten years, Americans aged 55 and older have become the fastest growing group of consumers declaring personal bankruptcy, according to the AARP. Over half of people aged 50 and older that have debt spend the majority of their monthly income paying it off. Mortgages, home-equity loans, and large credit-card balances are just some of the reasons seniors are experiencing financial trouble.
“This is a vulnerable population,” said Jow Cosentini, Director of Operations for Persels & Associates. “They are more prone to scams and if taken to the cleaners are least able to recover.”
If the housing market was better, retirees might have been able to downsize their homes to pay off their debts, or get reverse mortgages. But with the housing market in the shape it’s in, many seniors don’t have enough equity in their homes to make selling the largest asset pay off.
Seniors that refinanced their mortgages during the real estate boom may have enormous mortgage payments on houses that have shrunk to half their value. Those with risky adjustable rates can be facing deep trouble. Like other age groups, some seniors owe more on their homes than the homes are worth, but lack the time and the employability to get back on their financial feet.
According to the National Foundation for Credit Counseling, Seniors carrying high credit card debt into retirement, and the high interest payday loans against Social Security checks, produce the biggest burdens for senior debtors. With no income coming in, seniors have few options for paying off the credit cards and interest can grow quickly. Since last year's market's crash, many seniors don't have as much money saved for retirement as they planned.
Another aspect of senior's financial troubles can be their own children. Many parents try to help their children financially even if they can't afford it. Some financial advisers won't even allow their clients to loan money to their children when they are in or near retirement to prevent their financial situation from going further south.
“Many times bankruptcy is the best option for seniors with large debts,” said Joe Cosentini, Director of Operations for Persels & Associates. “People with large medical debts can declare bankruptcy and keep their savings because assets in IRAs and other retirement accounts are protected from bankruptcy judgments up to $1 million. Depending on state laws, some debtors can keep their home as well.”
Persels & Associates recommends that Seniors talk to an experienced bankruptcy attorney to find the best route to take. But Cosentini warns that Seniors should be careful as there are many scam artists that try and take advantage of senior citizens during their financial distress.
About Persels & Associates
Persels & Associates, LLC, and its entities are pioneers in the field of offering "unbundled" legal services to individuals who cannot afford traditional legal services. As Americans credit debt rose, Persels & Associates bridged the "gap" between consumers and their debtors. Today, Persels & Associates employs over 150 lawyers in the 50 states and has 25 central office staff attorneys with over 40,000 clients. For more information, please visit http://www.perselsandassociates.com.