In the past three decades, the number of baby boomers declaring bankruptcy has considerably climbed. In 1991, only 2% of senior citizens in the United States filed for bankruptcy; today, that percentage is closer to 12%. Although declaring bankruptcy might provide those who are struggling financially with a fresh start, there are costs involved. So why are baby boomers filing for bankruptcy at a higher rate?
The Reason
Older adults are filing bankruptcy suits in greater numbers, according to a Financial Times report available only to paid subscribers. The reasons include increasing medical expenses, insufficient income, disappearing pensions, unpaid education loans, as well as other expenses for their kids. In what should be their golden years, many baby boomers in the country cope with overcoming financial dangers, and bankruptcy is frequently a final resort.
Are Bankruptcies Preventable?
It is crucial that you act quickly to take proactive actions if you are having trouble making your monthly payments. By doing so, you may be able to avoid filing for bankruptcy.
Reduce spending by creating a budget.
You can find out exactly where your money is going by creating a budget. The next step is to identify costs you can go without. These can take the shape of subscriptions, memberships, dining out, and travel. You might consider downsizing if you believe you can live comfortably in a smaller home because it can be financially advantageous. This is true even if you already have a mortgage because you could have to reduce your monthly payments.
Supplement your income.
Even if it means returning to school or obtaining a new qualification, try to complement your current salary. Look for methods to use the resources the internet has to offer to generate passive income. Find out if you are eligible for government aid programs like food assistance, medical care, and mortgage forbearance. You may also think about the following additional methods for boosting your income:
- requesting a raise or a promotion
- Making money from your hobbies
- Freelancing
- Chauffeuring for ride-sharing services
- A portion of your assets are sold
Contact your creditors.
Because unsecured creditors frequently suffer financial losses when borrowers receive bankruptcy discharges, they are frequently amenable to settlement. Contact your creditors and let them know you want to pay off your obligations. Request help from them, such as a reduction in the interest rate or a reduction in the amount due each month. In some circumstances, debt relief may be advantageous to you because it allows you to drastically reduce your overall burden.
Think Consolidation
The process of repaying high interest debts by obtaining a loan with a reduced interest rate is referred to as debt consolidation. A debt consolidation loan could help you avoid bankruptcy if you are approved for one. However, keep in mind that you still need to establish a cap on your expenditure and make a single monthly payment.
How Does Filing for Bankruptcy Affect Things?
Whether you file for bankruptcy under Chapter 7 or Chapter 13, the two options accessible to individuals most frequently, will determine the outcome of your case.
- Chapter 7: Your nonexempt property is sold by a trustee who is appointed by the court, and the earnings are used to pay off your debts. It may take three to four months to complete the process. High earners might not be eligible.
- Chapter 13 gives you the option to keep your assets. To pay off your debt, you must continue paying revised monthly payments. It may take three to five years to complete the process.
Conclusion
Numerous baby boomers continue to face financial risk as they age due to uncontrollable expenses, growing debt, and insufficient income. Start making preparations to prevent bankruptcy if you think you might need to do so in the future. Consult a bankruptcy lawyer as soon as possible if you’ve gone through financial counseling and believe you have no other choice.