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Bankruptcy figures growing for older adults

Bankruptcies are on the rise among older adults, and one of the main reasons is medical debt. It is responsible for 60% of bankruptcy filings for people 65 and older. Older New Mexico residents may find themselves struggling to keep up with medical bills after spending all their savings, and they may no longer be working. Bankruptcy may be their only option.

One example is a 66-year-old retired handyman who said he had multiple injuries that drove up his medical expenses to the point that he could no longer pay them. He was working with his bank on a loan modification so he could keep his home of 40 years after filing for bankruptcy.

The percentage of people filing for bankruptcy who are 65 and up has increased to 12% from 2% in 1991. Between 1991 and 2016, the percentage of people filing for bankruptcy who were 55 to 64 went up 66%. In the 65 to 74 age group, the increase was 204%.

Experts say that although bankruptcy remains on the credit report for years, there are steps that adults of any age can take to rebuild credit. One step is getting a secured credit card, which involves putting down a deposit. Eventually, the holder might be able to apply for a traditional credit card.

An attorney may be able to help a person determine whether bankruptcy is the right choice and whether Chapter 7 or Chapter 13 is the appropriate type. These are usually determined based on income. Chapter 7 is usually discharged within a few months, but it generally does not allow a person to keep major assets. With Chapter 13, a person may be able to work out a payment plan to keep a home or other assets, but the process may last up to five years.

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