Financial Troubles & Senior Debt in Ohio
I have recently come across an article in the New York Times which discusses bankruptcy, retirement, and the financial troubles currently being faced by older Americans. This has me thinking about the reality of the financial troubles and senior debt much of our aging population is currently facing, rather than a happy fulfilling financially secure retirement. The debt incurred prior to retirement is suffocating once employment income ceases. Often seniors are just a medical emergency away from facing the possibility of losing everything. Many are also facing debt from a co-signed Parent Plus Student Loan or their own student loans. In fact, many Americans will die with their student loans still in repayment status.
Bankruptcy, Retirement, and reduced incomeAs our population ages and folks are retiring, they find that their retirement income is not enough to pay their unsecured debt, i.e. credit cards, student loans, personal loan, payday loans, revolving credit, medical bills, and the list goes on. While employed these folks may have had a household income of 75 to 80 thousand, which was enough to live on, paying living expenses and minimum payment on unsecured debts. Upon retirement, they find themselves faced with a major reduction of income.
As an example; The income might be reduced from $6,500 monthly to $4000, which may come from social security and a small pension. In our current economy, rent or a mortgage may be upwards of $1500 per month. The average car payment per household per car, is approximately $530, not including operating expense.Now that their total income has reduced, seniors may find themselves utilizing over half of their income toward housing and automobile. There is just not enough money left to pay the unsecured debt. While they may be able to utilize savings, juggle bills, and draining their retirement funds at a faster pace to maintain for a while, a lack of corrective action is usually not a sustainable option. Additionally, since retirement monies are offered special protection under bankruptcy code, seeking corrective action sooner, rather than later, could still have allowed these seniors to retire and maintain the lifestyle that they have earned. There has been an uptick in the amount of retirement-aged individuals and families who find themselves filing for bankruptcy. Bankruptcy can eliminate their unsecured debt and place them back into a sustainable financial situation. Rather than spending retirement years hiding from creditors and struggling with finances, they can make a fresh start with the unsecured debt eliminated. It is also important to understand that bankruptcy is designed to be a protection, therefore it is common for filers to be able to keep their home and car.