According to a recent story in USA Today, the Consumer Bankruptcy Project found that bankruptcy filings by those 65 and older jumped by 150 percent from 1991 to 2007. At the same time, bankruptcy filings for U.S. residents from the ages of 75 to 84 increased 433 percent.[9] You may need a bankruptcy attorney.
FILING FOR CHAPTER 7 BANKRUPTCY FOR SOME MAY BE THE ONLY WAY TO GET A FRESH START TO BEGIN RETIREMENT YEARS.
We work our jobs raise our kids pay our taxes and what happens? We have to beg our way through retirement. Is this a option that you want?
Instead of saving for retirement, a growing number of elderly Americans are instead preparing to file for Chapter 7 bankruptcy. At least that’s what the results of a new survey say.[9]
If you are approaching retirement years your age group ranks are growing in bankruptcy court.
According to a recent story in USA Today, the Consumer Bankruptcy Project found that bankruptcy filings by those 65 and older jumped by 150 percent from 1991 to 2007. At the same time, bankruptcy filings for U.S. residents from the ages of 75 to 84 increased 433 percent.[9]
ELDERLY HEALTH CARE AND BANKRUPTCY
see notes at;
http://goodmorningflint.blogspot.com/2010/11/only-option-for-some-you-are-not-alone.html
Who do you trust to advise you?
A study was conducted by Professor John Pottow, an expert on bankruptcy at the University of Michigan Law School. He found that even though the elderly account for a relatively small share of overall bankruptcy filings, the growth rate in their filings has been dramatic. For example, from 1991 to 2007, the percentage of bankruptcy petitioners age 65 to 74 rose 178 percent. Those figures reflect trends before the recession began in 2008, so it’s fair to assume the situation has worsened in the past few years due to job losses, diminished retirement portfolios and housing equity.[7]
Our economy and housing values will only slowly recover. How much time do we have? What are our choices? The notes in the following section show you choice, filing for personal bankruptcy.
Posted here by Flint Area Bankruptcy Attorney Terry Bankert 810-235-1970
PERSONAL BANKRUPTCY
Is personal bankruptcy -- filing Chapter 7 -- the right solution for you? For millions of debt-ridden people, it's the only way out of their financial quagmire. Today's high level of unemployment is resulting in waves of desperate folks seeking shelter under Chapter 7 of the U.S. bankruptcy code. [1]
What It Is:
Chapter 7 refers to the section of U.S. bankruptcy law under which companies and individuals liquidate their assets in order to repay their debts.[2]
WHY ARE MORE ELDERLY GOING BANKRUPT?
Not only have bankruptcy filings within the general populace increased in Colorado but so have bankruptcy filings for those over 60 years of age, with the primary reason attributed to credit card debt. Many of the elderly have limited incomes, typically Social Security retirement benefits combined with a pension income, and such limited income is unlikely to offset the increasing interest, late charges and other fees charged by the credit card companies.[8]
There’s no empirical evidence as to why bankruptcy filings have increased among the elderly but my experience (from years of experience handling bankruptcy matters in Denver and most areas of Colorado) is that the elderly are generally less sophisticated with using credit cards and do not have similar access to other types of credit (due to having a fixed income). Additionally, many of the elderly are not as likely to negotiate with creditors and are typically less inclined to request financial help from family and friends.[8]
Most of the bankruptcy filings I see from elderly clients are chapter 7 cases. Having a limited income due to being retired, the overwhelming majority of my clients pass the Means Test and are not required to pay back any debts to unsecured creditors in a chapter 13 payment plan.[8]
The minority of my elderly clients who do file for chapter 13 in Colorado do so because of a pending foreclosure (with their house being their most valuable asset) or because of a previous chapter 7 filing within the past 8 years. Those facing foreclosure often lack the ability to keep up with monthly mortgage payments (especially as they simultaneously tackle the aforementioned credit card debt). [8]
Many of my elderly clients are also upside down on their mortgages as housing prices have decreased in Colorado (and nationwide) and are forced to file for chapter 13 bankruptcy to prevent against foreclosure.[8]
How It Works/Example:
Individuals, partnerships, or corporations can file bankruptcy under Chapter 7.[2]
Individuals
To file Chapter 7, the debtor files a petition with the local bankruptcy court (in some cases, creditors can force a debtor into Chapter 7 by filing the petition themselves). The debtor must provide the court with financial and tax information, as well as a list of creditors and outstanding debts. In most cases, the court also requires proof that the individual has obtained credit counseling. Filing the Chapter 7 petition automatically stops most collection actions against the debtor, including lawsuits, garnishments, and phone calls.[2]
Here's a shocking statistic to put the current financial environment in perspective: 1,512,989 people filed for bankruptcy in the 12 months ending June 30, 2010, a +21% increase from the 12 month period ending June 30, 2009. That's more people than the populations of any of these 10 states: New Hampshire, Maine, Hawaii, Rhode Island, Montana, Delaware, South Dakota, Alaska, North Dakota or Wyoming. It's also the most bankruptcies filed for any period following the Bankruptcy Prevention Act of 2005. [1]
Bankruptcy cases filed in federal courts for Fiscal Year (FY) 2010, the 12-month period ending Sept. 30, totaled 1,596,355, up 13.8 percent over total FY 2009 bankruptcy filings of 1,402,816; according to statistics released Monday by the Administrative Office of the U.S. Courts. While non-business bankruptcy filings continued to rise in FY 2010, business filings dropped slightly for the first time since 2006. The bankruptcies reported are for Oct. 1, 2009 through Sept. 30, 2010.[5]
There are many advantages to declaring bankruptcy. In most cases, filing for Chapter 7 will automatically stop most collection actions, including lawsuits, wage garnishments, and those never-ending phone calls. [1]
A TRUSTEE GETS INVOLVED
The U.S. trustee (or the court itself, in some states) then appoints an impartial trustee to handle the case and liquidate the debtor's assets. If all the debtor's assets are exempt or subject to liens, there may not be any assets to liquidate and hence no money to distribute to creditors. If there are assets to liquidate, however, the creditors usually file a written claim so that they can receive some of the proceeds. The trustee handles the liquidation and determines which creditors are paid first.[2]
However, before you take the drastic step of filing under Chapter 7, you need to be fully apprised of the potential pitfalls. Here's a look at a few nasty surprises that may await you:[1]
Bankruptcy laws vary from state to state.
Every state has its own peculiarities and exemptions; some state laws are more generous than others. Some states allow exemptions to shelter your automobile, household goods, Individual Retirement Accounts (IRAs), etc. Other states are more restrictive. Before you file for bankruptcy, do some homework to find out the laws applicable to your home state.[1]
Mortgages and any other secured loans are not eliminated.
Bankruptcy is designed to get creditors off your back, so you can get some breathing room to right yourself. Certain types of unsecured debt (e.g., credit cards) can be wiped off the books. However, to the consternation of many who file for bankruptcy, the laws don't allow you to just walk away from your mortgage or any other secured loan (any loan in which you've pledge some kind of "collateral" -- like your car or your home -- for the loan). Bankruptcy only keeps those payments at bay until you have dealt with other creditors.[1]
Collateral is an asset pledged by a borrower to a lender, usually in return for a loan. The lender has the right to seize the collateral if the borrower defaults on the obligation.[3]
Any cosigners of any collateral are in the same boat with you.
Likewise, if any of your collateral involves consignors, your cosigners won't be able to emerge out of debt with you. They will be liable for part or all of the debt you discharge through bankruptcy.[1]
Bankruptcy is reported on your credit report for 10 years.
Bankruptcy is like a Scarlet Letter that follows you around for a decade. The good news is that within this time frame, you can still re-establish a good credit rating, through frugality and paying off your debts in a timely fashion.[1]
What It Is:
A credit report is a report detailing a person's financial history specifically related to their ability to repay borrowed money.[4]
How It Works/Example:
There are three major credit bureau s in the United States: TransUnion, Experian and Equifax. Each keeps a database of financial information about borrowers, including the names of all their creditors (past and present), the dates when their accounts opened and closed, whether the account is a joint account, the balance and credit limit on each account, and the number and dates of late payments.[4]
Related information is also including such as previous names, address history, birth date, phone numbers, social security number, marital status, any legal judgments, child support owed, arrests, indictments, convictions, etc. Not just anyone can view someone's credit report --it is only available to those with a legally permissible purpose.[4]
Information on credit reports are used to determine a person's credit score. The credit score (or FICO score) in turn reflects a person's credit risk--that is, whether he or she is a trustworthy borrower. The more prompt and responsible a person is financially, the higher his or her FICO score is.[4]
In general, negative information (such as late payments or tax liens) remains on a credit report for seven years. Bankruptcies stay on the report for 10.
By law, credit bureaus must send you one copy (at your request) of your credit report each year. Additionally, if you have been denied a credit card because of information on your credit report, you may receive another free copy within 60 days of the denial. In most other circumstances, you usually have to pay the credit bureau for a copy of your credit report.[4]
Why It Matters:
Your credit report and the creditworthiness it reflects tells banks, credit card companies, retail stores, utilities, landlords, and even employers whether you are a financially responsible person. Bad credit causes people to be denied for loans, pay higher interest rates on loans, and have trouble in even the most minor areas of life, such as renting a video, getting utilities turned on or renting a car. Character and collateral also influence a person's creditworthiness, but the credit report often outweighs these attributes.[4]
It is important to note that credit reports often contain errors, so a consistent periodic look at your credit report can be very helpful. This also goes a long way toward preventing identity theft, because any accounts opened in your name will appear there. You have the right to contest incorrect information in your credit report, and credit bureau s by law must provide toll-free phone numbers, live customer-service representatives, and an expeditious investigation process. [4]
Bankruptcy does not wipe out withholding or sales taxes.
It's possible to get rid of old income taxes that are more than three years old, but this benefit has given rise to a myth that you also can eliminate withholding or sales taxes. This is not possible, no matter how old the taxes.[1]
You can't cherry pick the debts and property to list in your bankruptcy.
Many people seem to think that they can go through their portfolio of possessions and pick and choose what they want to list in the bankruptcy. They're shocked when they discover that it's all fair game. When you file bankruptcy, the law mandates that you list all your property and debts.[1]
Declaring bankruptcy does not get your "ex" off your back.
Bankruptcy does not allow you to cease payment on child support or alimony. Sorry, but you still need to write those checks. Although divorce is one of the most common causes of bankruptcy (click here to see the Top Causes of Bankruptcy...And How to Avoid Them), your agreement is not affected by a Chapter 7 filing. So, if you're thinking that you can wiggle out of those responsibilities, think again.[1]
Declaring bankruptcy does not get you off the hook on student loans.
Your student loan payments still need to be made. They can't be wiped out, as with a credit card balance.[1]
You must still fear the repo man.
A bankruptcy discharge doesn't eliminate liens. A secured debt is a debt where the creditor has a lien on your property and can repossess it if you don't pay the debt. Bankruptcy can wipe out the debt, but it still doesn't prevent the secured creditor from repossessing your property.[1]
HEALTH CARE AND BANKRUPTCY
healthcare expenses can wreck retirement security - a fact underscored by a recent study that found medical expenses are a major contributor to bankruptcy among older Americans.[6]
The study was conducted by Professor John Pottow, an expert on bankruptcy at the University of Michigan Law School. He found that even though the elderly account for a relatively small share of overall bankruptcy filings, the growth rate in their filings has been dramatic. For example, from 1991 to 2007, the percentage of bankruptcy petitioners age 65 to 74 rose 178 percent. Those figures reflect trends before the recession began in 2008, so it's fair to assume the situation has worsened in the past few years due to job losses, diminished retirement portfolios and housing equity.[6]
Healthcare is a major area of expense in retirement, and costs are rising more quickly than overall inflation.[6]
The Center for Retirement Research at Boston College (CRR) reports that the typical married couple at age 65 can expect to spend $197,000 in lifetime uninsured health costs, including insurance premiums, out-of-pocket and home healthcare. That figure excludes any long-term care need. When nursing care is factored in, the typical cost rises to $260,000, with a 5 percent chance of hitting $570,000.[6]
Research by Fidelity Investments shows that retiree healthcare expenses this year are 4.2 percent higher than in 2009, and have jumped 56 percent since 2002. By contrast, overall consumer prices are up just 1.1 percent so far this year. Fidelity also found that monthly healthcare costs average $535 this year, second only to the cost of food.[6]
A JUDGE GETS INVOLVED
Ultimately, a judge decides whether to discharge an individual's debt. The judge can deny the discharge if the debtor failed to keep adequate records, failed to explain the loss of any assets, committed a crime, disobeyed court orders, or did not seek credit counseling. Alimony, child support, and student loans generally cannot be discharged in a Chapter 7 case, nor can most judgments against the debtor for criminal acts.[2]
Why It Matters:
Chapter 7 is usually the last resort for individuals and businesses. For individuals, the goal of Chapter 7 is to get a fresh start by removing debts. However, bankruptcy virtually ruins a person's credit for several years, making it very difficult and expensive to borrow money in the future.[2]
The law works to prevent people from filing Chapter 7 merely to avoid repaying a debt. This is why not all individuals qualify for Chapter 7, especially those with high monthly income or those primarily saddled with consumer debts (i.e., credit card debt). If the individual does not qualify for Chapter 7, the case usually becomes a Chapter 13 filing, where the individual must still repay the debt, albeit under a payment plan.[2]
ELDERLY AMERICANS AND BANKRUPTCY
From these unsettling numbers, it seems that more elderly Americans will soon need to learn how to claim bankruptcy.[9]
This is a shame: U.S. residents who are nearing their retirement ages are supposed to be worrying about how much money they’ll need to save to spend their post-working years in a state of peace. They’re not supposed to learning the ins and outs of how to file bankruptcy.[9]
However, this is exactly what is happening. As usual, blame falls on the struggling national economy. Older Americans are facing the same problems that all U.S. residents are facing: Some have lost their jobs late in life. Others have had to cope with medical bills that are simply overwhelming. Still others have watched as their homes have fallen in value. Many U.S. residents had been counting on their homes’ ever-increasing values to help fund their retirement years. The Great Recession has certainly scuttled that dream.
Of course, the entire country is struggling these days, or so it seems. The number of bankruptcy filings, both of Chapter 7 bankruptcy and Chapter 13 claims, is on the rise. Bankruptcy filings aren’t discriminating based on age, gender, or wealth. U.S. residents of all kinds are facing overwhelming debt and declining yearly incomes.[9]
It’s a situation that won’t improve until the national economy shows some sign of regaining momentum. Unfortunately, it doesn’t look as if this is going to happen any time soon. Yes, it’s true that officially the economy is in recovery mode, but because unemployment remains so high, and because home values continue to fall or remain stagnant, the recovery doesn’t feel like one.[9]
Older Americans struggling with their finances do have some options to avoid Chapter 13 or Chapter 7 bankruptcy. [9]
DO YOU WANT TO BORROW FROM FAMILY MEMBERS?
They can try to borrow money from family members. They can work with non-profit credit counselors to set up budgets that allow them to pay down their outstanding debt. They can also take out debt consolidation loans or work with debt settlement providers. Of course, none of these options is perfect. They call come with negatives, everything from high fees and interest rates to the embarrassment of asking family members for financial help.[9]
FILING FOR CHAPTER 7 BANKRUPTCY FOR SOME MAY BE THE ONLY WAY TO GET A FRESH START TO BEGIN RETIREMENT YEARS.]
Posted here by Terry R. Bankeret
http://attorneybankert.com/
[1]
http://www.investinganswers.com/education/going-bankrupt-isnt-easy-startling-facts-you-never-knew-about-filing-bankrup-1958
[2]
http://www.investinganswers.com/term/chapter-7-352
[3]
http://www.investinganswers.com/term/collateral-1034
[4]
http://www.investinganswers.com/term/credit-report-113
[5]
http://www.grandrapidsmn.com/business/article_13b0cf04-ee8e-11df-8d50-001cc4c03286.html
[6]
http://www.reuters.com/article/idUSTRE6A73M920101108
[7]
http://www.americasnewsonline.com/study-on-bankruptcy-shows-dramatic-growth-in-filings-from-elderly-911/
[8]
http://www.jdsupra.com/post/documentViewer.aspx?fid=0dfce5a1-baa3-41f2-b47c-ea24f4efc410
[9]
http://www.creditloan.com/blog/2010/10/29/chapter-7-bankruptcy-filings-on-rise-among-older-americans/
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Saturday, November 13, 2010
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