Statistics show that older people are filing for bankruptcy at higher rates than ever before, in Mississippi and across the country. According a 2018 report by the Consumer Bankruptcy Project, more than 10% of people who filed for bankruptcy protection in 2016 were 65 years old or older; this was a significant increase over the number in 1991.
The elderly population of the country also grew over that time span, but only by 2.3%. There are a number of economic and social factors contributing to the rise in elder bankruptcy. People are living longer, and they need more medical care in their later years. The cost of medical care has been increasing for decades.
Additionally, many people 65 and older have little or no personal savings and cannot rely on a company pension or 401(k) plan. They are also increasingly in debt, with nearly half of Americans at least 75 years of age carrying debt by 2016 compared to only about 20% in 1989, according to a survey of consumer finances by the U.S. Federal Reserve. Approximately 800,000 households made bankruptcy filings in 2016, including an estimated 133,000 senior citizens.
People in Mississippi who are struggling to pay for life necessities or pay down debts might want to schedule a consultation with an attorney. An attorney who practices bankruptcy law might be able to help by suggesting options to reduce or eliminate debt or by examining the client’s financial situation and negotiating settlements with creditors. An attorney might help themprepare for bankruptcy by guiding them through pre-bankruptcy counseling in advance of filing a petition.
For many people in Mississippi who are struggling to pay down debts, filing for bankruptcy is a viable option to improve their financial position. During the peak of the recent financial downturn, almost 1.6 million bankruptcies were filed. The majority of those filings were made by consumers. The total number of annual filings dropped to under 800,000 by the time ten years had passed. People who have credit card debt may be able to get a fresh start via bankruptcy.
If the person is in a position where he or she has a lot of debt and does not own major assets like a home, a bankruptcy filing can clean the slate. As part of the bankruptcy process, petitioners are required to complete finance classes. These classes, which are taken both before and after the bankruptcy, can provide education, information and perspective that can be useful to the person going forward.
As many as two-thirds of all bankruptcies are filed because the person has medical debt. Going through divorce is also a common catalyst for bankruptcy filings. It’s a misconception that people who file for bankruptcy have to give up all of their assets. In a Chapter 7 bankruptcy, the filer may have the opportunity to reaffirm certain debts and keep assets like a home or a car.
Individuals who have questions about the bankruptcy process might want to schedule a meeting with a lawyer. A lawyer who has experience practicing bankruptcy law may be able to help by examining the client’s debts and income and suggesting options to reduce or eliminate outstanding debts. A lawyer may be able to help by drafting and filing the petition to begin the bankruptcy case, by communicating with the bankruptcy trustee on the client’s behalf or by ensuring the client completes necessary counseling and other requirements.
All types of people in Mississippi might experience financial hardship and fall behind on paying their debts. When debt collectors start to contact these people, they might use harsh tactics that inspire fear. The Consumer Financial Protection Bureau reports that 25% of debtors have felt intimidated by collection agencies. Although debt is a serious matter, people have legal rights that potentially give them the ability to limit aggressive collection practices.
Being served with papers for a lawsuit from a debt collector ranks high on debtors’ fears. Even when people feel helpless when confronted by lawsuits, they should never ignore them. They should supply their official answer to the court within the deadline stated in the lawsuit. When people fail to tell the court their side of the story, judges side with debt collectors. They issue judgments against debtors that could enable drastic actions like wage garnishment or asset seizure.
Debtors can demand that the parties suing them prove their right to collect the debt. Creditors often sell unpaid debts to collection agencies. Debts might pass through multiple hands before a collector files a lawsuit. Legally, the burden of proof falls on the collector. Collectors do not necessarily possess the documentation to support their demands for payment. If that party cannot provide documentation showing that the person signed a credit agreement, then the court could side with the debtor.
Before responding to a lawsuit, a conversation with an attorney might be informative. A lawyer could check on issues like the debt’s statute of limitations. A person experiencing financial difficulties could also learn about bankruptcy. A bankruptcy filing could temporarily halt collection actions or a foreclosure. A successful filing might discharge or restructure debts and give a person a fresh start on life.
People in Mississippi who are struggling with debt may be among the nearly one-third of people who filed for Chapter 7 bankruptcy with student loan debt. This was one finding in a study by LendEDU. The same study also found that among that group, on average, almost half of their total debt constitutes student loans. These figures do not include people who filed for Chapter 13 bankruptcy, which involves creating a payment plan.
The cost of going to college, along with student loan debt, has skyrocketed in the past several years. While it would take baby boomers just over 300 hours at minimum wage to pay off a four-year college education, millennials would need to work more than 4,400 hours. Since student loans generally cannot be discharged in a bankruptcy, even after filing, people may be facing a significant debt burden. However, discharging credit card and other debt may allow them to free up income to pay off their loans.
All the same, the student loan debt situation is considered to be a growing crisis. Many millennials are unable to purchase homes or spend in any other significant way because of this. The national total has reached a record high of $1.5 trillion, and in 2018, the average debt for each person graduating with loans was $29,800.
People who are struggling with debt might want to talk to an attorney and discuss whether filing for bankruptcy is the best option. The two primary types for consumers are Chapter 7 and Chapter 13, and each has its own eligibility and other requirements that an attorney can outline.
Young people in Mississippi and around the country are finding it increasingly difficult to manage their revolving debt according to the New York Federal Reserve’s most recent Quarterly Report on Household Debt and Credit. The report reveals that more than 8% of the credit card balances owed by Americans between 18 and 29 years of age are 90 days or longer past due. This is the highest rate of delinquency since 2011 when the economy was still recovering from the Great Recession.
Financial experts say that rising interest rates are likely responsible. The Federal Reserve raised the cost of borrowing several times in 2018, and the average credit card interest rate for consumers with good credit is now 18%. Those with troubled credit histories often pay as much as 25% interest on their revolving debt. Higher interest rates also make it more difficult to escape the credit card debt trap. Six out of 10 Americans with credit cards carry a balance, and more than half of them have done so for a year or longer.
The figures also reveal that more Gen Z and millennial Americans are applying for credit cards. Between 2008 and 2012, only about four out of 10 Americans in their 20s had one or more credit cards. That figure has now risen to more than 50%. Younger borrowers also tend to sign up for credit cards that offer reward points or travel perks rather than low introductory interest rates.
Young borrowers are sometimes reluctant to seek bankruptcy relief because they are worried about ruining their credit. Attorneys with debt relief experience could explain that a discharged bankruptcy often increases the credit scores of individuals with a history of late payments. This is because bankruptcy reduces the amount of debt they owe and improves their debt-to-income ratios.
