Bankruptcy Filings in Colorado Among the Elderly Have Increased, Mainly Because of Credit Card Debt
October 26, 2010
By: David M. Serafin
Not only have bankruptcy filings within the general populace increased in Colorado but so have bankruptcy filings for those 60 years of age and older, 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. As an experienced Denver Bankruptcy attorney, I represent a high percentage of elderly clients throughout the Bankruptcy process with the goal of protection from creditors, getting a financial fresh start and discharging the most debt possible.
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.
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.
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), because they own a valuable house with substantial equity or because of a previous chapter 7 filing and discharge within the past 8 years.
Elderly clients up against foreclosure often are retired and do not have monthly disposable income to stay fully current on their mortgage (while, at the same time, paying down credit cards and other unsecured debt).
Other bankruptcy clients, again due to limited income and having been retired and out of the workforce for several years, are forced into a chapter 13 bankruptcy having filed for chapter 7 bankruptcy within the past 8 years.
An elderly person looking at Bankruptcy relief in Colorado is more likely to have a house to protect from unsecured creditors. If the house has over $105,000 of equity per the Colorado Homestead laws (the exemption increases from $75,000 for Debtors who are at least 60 years of age as of the Bankruptcy Petition date), Chapter 13 Bankruptcy will allow for a homeowner to immediately stop any foreclosure sale and propose up to five years to repay back (interest free) any past due mortgage payments. (Note that the regular monthly mortgage payment obligation will continue like normal going forward so the debtor is making two payments – one for the arrears to the Trustee and also the regular mortgage payment so I will need to carefully help you prepare a feasible budget so that the Chapter 13 Plan will succeed.) Conversely, most elderly clients who don’t own a house or who have less equity in their residence, will be eligible to completely eliminate their unsecured debt and collections without any repayment in Chapter 7 Bankruptcy. As an experienced Colorado Bankruptcy lawyer, I will help you prepare the most cost-effective solution to wiping out your debts.