Senior Citizen Debt and Bankruptcy | Relief Options For The Elderly | Judgment Proof Assets (2024)

Today’s turbulent economic times have been particularly tough on the elderly, whose income is frequently limited to just Social Security and, possibly, a modest pension. Not only is their overall cost of living increasing exponentially, but they find themselves overwhelmed with credit card and other debt that they cannot manage.

The reasons behind the senior citizen debt crisis are many and varied. The rising costs of health care and prescription drugs affect this segment of society perhaps more than any other. Some seniors are financially drained by their adult children and grandchildren, who can sometimes view them (albeit lovingly) as an unlimited source of funding that will never say “no”. Other seniors fall on hard times when their spouse passes away. Frequently seniors feel that the only way that they can address their budgetary shortfall is by resorting to credit cards. This solution, though, only throws fuel on the fire and just makes their financial situation worse, and can become a vicious cycle that gets repeated each and every month until their financial hole gets so deep that something has to give.

There are a few factors somewhat unique to this demographic group that tends to makes their debt problems even more difficult to deal with, or even recognize:

• Many elderly people tend to view their duty to repay their debt with almost a religious fervor that is admirable but not realistic. Their mindset seems to be that they were brought up in a different time when you repaid your debts no matter what, and bankruptcy was a dirty word not to be considered, or even discussed. Many seniors, if given a choice between buying food and paying a credit card bill, will forego the food and pay the credit card company. The same scenario also plays out with alarming regularity when the choice is between buying necessary prescription drugs and paying the credit card company. This type of decision making does not bode well for the long-term health and well-being of our elderly loved ones.
• Many elderly people in financial trouble find it embarrassing and humiliating, and actually conceal their problem from their loved ones. Their sense of pride and self-sufficiency can make it difficult for them to muster up the courage to ask for help, or even know how to ask for help. This behavior can just make matters worse, since the first step in resolving any problem is usually recognizing it (or having someone else recognize it) and discussing it before it becomes too late.

Family members and caregivers should support the elderly and keep an eye on the finances, and be ever vigilant for signs that their “golden years” are being threatened by unmanageable debt. The options available to debt-ridden senior citizens depend in large part upon their particular financial circ*mstances and personal “make up”. There is not a “one size fits all” solution.

Many of the debt ridden elderly are “judgment proof” and do not even know it. Being “judgment proof” means that they have no assets or belongings that a judgment creditor can take from them. Does the following scenario describe the your circ*mstances (or those of an elderly loved one): your sole income is Social Security and (maybe) a small pension; you rent an apartment and own no real estate; you are driving a beat up, 10-year old car; the only funds in your bank account are Social Security and pension money? If this sounds all too familiar and you live in New York State, you are probably “judgment proof”. The experienced New York bankruptcy attorneys at will be happy to provide you with a definitive answer to this question. If you are “judgment proof”, you have two options that are drastically different:

Option One: Do nothing. Buy your food and prescription medications and do not pay your credit cards. This option can be stressful and is not for everyone—this is where your personal “make up” comes into play, since your debt collectors will try to hound you to death when you stop paying them. There are some seniors, armed with the knowledge that their creditors can take nothing from them, who are willing and able to just ignore the constant hounding and (possibly) steady stream of process servers knocking on the front door with lawsuit papers in hand. Those seniors who can avail themselves of this option will avoid the costs and “unpleasantness” associated with a bankruptcy filing. However, what many seniors seem to really want and need almost more than anything else, is some peace of mind, and proceeding in this fashion will generally not yield the desired peace of mind.

Option Two: File a Chapter 7 bankruptcy. The “upside” of proceeding in this fashion is that your Chapter 7 Trustee will not be able to reach your assets either, and the stress associated with harassing phone calls and other collection activities will stop immediately upon the filing of your bankruptcy petition. The desired peace of mind occurs instantly. The “downside” is that the bankruptcy filing will remain on your credit report for ten years, which most seniors could care less about because (1) their credit rating is already bad because of their excessive debt, and (2) they recognize that it was their formerly “good” credit rating that allowed them to get into financial trouble in the first place.

For those seniors who own real estate or have investments or other assets, the experienced Middletown, New York bankruptcy lawyers at Hayward, Parker & O’Leary Esqs. will be able to evaluate your circ*mstances and counsel you as to the best manner to proceed, either through filing a Chapter 7 bankruptcy or a Chapter 13 bankruptcy or utilizing a Non-Bankruptcy Alternative.