Law Offices of Jennifer LaRese, LLC
Call Today 203-583-8668

Larese Law Blog

Seeking debt relief for seniors

As the American population ages, more and more senior citizens are finding themselves in challenging financial situations. Indeed, in some cases, women in particular who survive their spouses, or whose spouses are no longer able to make decisions themselves, are faced with daunting decisions to make. This is particularly true if the family is already in debt. Thankfully, debt relief options are available here in Connecticut to help these individuals restore their financial stability. 

Immediately, many financial advisors will recommend that elderly people seek the support of trusted younger family members in helping to determine the best course of action. Senior citizens can struggle with a litany of age-related illnesses that can influence their ability to make sound decisions for themselves. The help of family in this instance can be invaluable. 

Debt relief: Use of credit cards on the rise

It should come as no surprise that one of the most tenacious forms of debt is credit card debt. Connecticut residents seeking debt relief are often doing so as a result of unsustainable credit card debt. This may be partly due to the fact that credit cards are seeing more use now than ever before, prompting some consumers to seek alternate sources of credit. 

In the first quarter of 2017 alone, over 171 million customers accessed credit cards. Estimates say households in the United States combine to make up some $1 trillion in credit card debt. Thanks to ease of access, this form of "revolving credit" has been on the rise for the last 10 years. Lenders who offer below average rates only add to the incentive to use credit, sometimes unwisely. 

Identifying the value of Chapter 7 bankruptcy

For many Americans, debt is a real and pressing concern in their day-to-day lives. Here in Connecticut, many families carry a variety of debt, the most troubling being unsecured credit card debt, which can be notoriously difficult to pay down due to high interest rates. For those in dire straits, Chapter 7 bankruptcy could be a viable alternative, but it is important to understand what such a filing entails. 

In general, Chapter 7 bankruptcy (also known as liquidation bankruptcy) involves filing in a local bankruptcy court and being assigned a trustee to help navigate the process. Chapter 7 targets unsecured debts like personal loans, credit cards and medical debt. In some cases, a bankruptcy court is in a position to forgive debts of this kind. While the record of this erasure remains on a credit score for ten years, it has the power to remove the impending spectre of immediate debt. 

More senior citizens file for Chapter 7 bankruptcy

There has been a rise over the last few years of senior citizens filing for bankruptcy. Here in Connecticut and elsewhere in the nation, more and more people over the age of 65 are using Chapter 7 bankruptcy as a way to offset mounting debts that can result from a variety of sources unique to the elderly. In many cases, seniors have reported a definite upward trend in their quality of life once they are out from under the burden of unsustainable debt. 

For many seniors, medical debt is the biggest reason people over 65 file for bankruptcy. This is particularly true of seniors who have lost their spouses, and even more so for women in this situation. Often, women of this age bracket suffer from a lack of financial literacy, as their husbands were traditionally responsible for the family's financial affairs. If the husband passes away before the wife, which is common given women tend to live longer than men, the senior women left behind can understandably struggle with their finances. 

Paying down credit cards sometimes involves debt relief

Far and away, one of the most challenging debts to overcome is credit card debt. Connecticut households, like most American households, carry an average of $18,000 in credit debt alone, which can be a daunting task to pay down for even the most frugal individuals. Thankfully, there are debt relief strategies available, though which one is best for a given situation can vary based on the individual or family involved. 

For households that do not qualify for balance transfers or loans, some experts suggest the so-called "snowball" method. This method involves choosing the credit card with the lowest balance and paying it off first while still paying the minimum on other cards. The card with the next-lowest balance follows, and so on. This can be psychologically helpful as paying off one card entirely can help motivate the card holder to continue positive habits. 

How to effectively exercise debt relief

For many people, debt is a major issue in their day-to-day lives. Connecticut residents seeking debt relief, particularly for unsecured debts like credit cards, have several options available to them. From consolidation plans to Chapter 7 bankruptcy, there is a solution for every debtor depending on his or her particular circumstances. 

For example, it is possible to borrow against oneself in the form of taking out money from a 401(k) or borrowing against life insurance. However, these can both be risky propositions. If an individual leaves a company before paying back the loan, that money is due immediately. Similarly, borrowing against life insurance runs the risk of leaving family members with less financial stability if the debtor is to die before the loan is repaid. 

Seeking debt relief for credit card debt

Credit card debt can be one of the most daunting types of debt to overcome. Connecticut residents seeking debt relief understand how difficult it can be to get out from under thousands, and sometimes tens of thousands of of dollars in credit card debt. Thankfully, there are a variety of options available to individuals who find themselves deeply in debt, from debt management to Chapter 7 bankruptcy. 

Debt management plans, or DMPs, are offered by credit counselors as a way to handle insurmountable debt. It involves consolidating all outstanding unsecured debts into one monthly payment made to the counseling agency. A counselor works on behalf of the individual to negotiate distribution of payment between creditors. Unfortunately, secured debts like loans and mortgages cannot be included in a DMP. 

Knowing when Chapter 13 is the right choice for you

Dealing with the consequences of insurmountable debt is overwhelming and frustrating. The consequences of carrying a lot of debt can reach into various areas of your life, and eventually, you may face threats of serious penalties such as foreclosure or repossession. If you are facing the possibility of losing your Connecticut home because you are behind and you lack the ability to catch up, you may consider the benefits of filing for Chapter 13 bankruptcy. 

Bankruptcy is probably not your first choice, but it could be the most practical and beneficial step for your family. Chapter 13 is a plan that allows for the reorganization of your debts, which you will then repay over a period of three to five years. This particular chapter of consumer bankruptcy is a good choice for applicants who are not eligible for Chapter 7 bankruptcy. 

Is Chapter 7 an option when medical bills are making you sick?

Medical treatment is expensive. Even for minor injuries and illnesses, health care can come at a great cost. Connecticut readers know that even with a good insurance plan, a major accident or prolonged illness can wipe out savings and leave a family in extreme debt. Medical bills can quickly outpace your ability to pay, eventually leading to financial trouble and significant stress. However, Chapter 7 bankruptcy may be an option. 

Whether you needed emergency medical care, dental work or found yourself very ill and in the hospital, your recovery could come at a significant cost. Testing, lab work and even just paying your co-pay can be exorbitant. Many people struggle with medical debt, and for some, it can become a major financial struggle. Eventually, unpaid medical debt may end up in collections. 

Chapter 7 may be just the ticket to restored financial stability

Connecticut is not immune to economic downswings from time to time, just as most other states in the nation have experienced. When an individual resident or a business owner comes upon difficult financial times, it may be challenging to figure out the most viable option to rectify the problem. What works in one set of circumstances may not even be possible in another; for instance, some people are not eligible for Chapter 7 bankruptcy while others are.

There are several types of bankruptcy, and one or more may be feasible in a particular situation. Most individuals filing for personal bankruptcy choose Chapter 7 or Chapter 13.  The latter includes a reorganization of debt plan and a restructuring of payments. The key factor here is that the person filing for debt relief with this type of option retains his or her own assets.