Seniors and Medical Debt: Bankruptcy as a Life Choice

September 16, 2012

"Life is like a box of chocolates," Forrest Gump's mother told him in the hit movie of that name. "You never know what you're gonna get."

Forrest Gump had many adventures in the Oscar-winning film, but aging wasn't one of them. For senior citizens, however, the ultimate box-of-chocolates experience awaits: not knowing how their health and finances will hold out in their retirement years.

For many seniors, getting old can become a source of great anxiety as declining income and increasing health problems trigger problems with medical debt. This article will discuss why many seniors choose to file bankruptcy to obtain debt relief.

Increase in Bankruptcy Filings by Seniors

Even before the Great Recession hit, senior citizens were declaring bankruptcy more often than younger people. From 1991 to 2007, the number of bankruptcy petitions by people 65 or older went up by 150 percent.

The increase was highest among those between the ages of 75 and 84. For that group, the rise was a startling 433 percent.

This increase occurred, it should be noted, before the recession began in 2007, wiping out substantial sums from home values, retirement accounts and stock portfolios. Though the recession ended in 2009, many seniors have simply not regained their financial health.

Medical Debt Among the Elderly

Declining physical health is inevitably an issue for many older people as well. To be sure, some seniors remain vital and relatively free of health problems for a remarkably long time. Many seniors, however, experience chronic health conditions that sap their morale and their savings.

"Health care is a big issue for the elderly," notes George Gaberlavage, the director of consumer and state affairs for the AARP public policy institute. "And out-of-pocket expenses have been going up."

Gaberlavage believes that medical debt is the single biggest reason for the increase in bankruptcy filings among seniors.

Having health insurance is not necessarily enough to protect seniors from this problem. For severe medical conditions, the policy may not provide as much financial protection as someone ultimately needs. Even for less severe conditions, the constant co-pays can add up to a significant burden -- especially for a senior citizen on a fixed income.

When this happens, Social Security benefits may not be enough to bridge the gap between what you owe and what you can realistically pay.

Bankruptcy as a Solution

If you see yourself in the scenario sketched above, bankruptcy may be your best option for regaining financial peace of mind. You can't be sure what is waiting for you next in life's "box of chocolates." But if you are struggling with medical debt, discussing your specific situation with an experienced bankruptcy lawyer can help make your next choice from that box a strategic one.

Article provided by Edwin L Feld & Associates, LLC
Visit us at www.edfeldlaw.com/