The primary reason people in Tennessee and the rest of the nation file for personal bankruptcy is medical debt. People who are at least 65 years of age or older account for 8 percent of the bankruptcy filers. This figure represents a 1 percent increase from 2008.
One of the reasons attributed to the increase is the effect that the 2008 economic recession had on the finances of individuals in this age group. Many people are left with no other choice than to file for bankruptcy in states that allow creditors to seize up to 25 percent of the monthly disposal net income earned by debtors. Also, wives tend to outlive their husbands, who are typically responsible for managing the household finances. The surviving wives’ lack of financial expertise often prompts them to file for bankruptcy.
According to one bankruptcy practitioner, the revamping of the United States bankruptcy code in 2005 by Congress did little to lower the number of bankruptcy filings. In fact, according to the bankruptcy attorney, the legislation made the bankruptcy process more complicated, expensive and longer.
Another element that is exacerbating the financial situation elderly debtors are facing is debt collectors. According to a report issued by the federal Consumer Financial Protection Bureau, the service or products consumers aged 62 years or older criticized above all others was debt collection.
In addition to giving elderly debtors a brand new financial start, bankruptcy also often provides better mental health in the form of emotional relief. For many, debts can be a major source of stress.
An attorney that practices bankruptcy law may advise clients about how bankruptcy may provide them with debt relief, stop foreclosure, reduce interest payments and end creditor harassment. A lawyer may assess a client’s debts and income and advise whether Chapter 13 bankruptcy would be a viable option.