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High medical bills are leading the elderly to file bankruptcy

In Washington State and throughout the country, there is a steady flow of people age 65 and over who are filing bankruptcy to obtain debt relief. The biggest cause of this trend is medical bills that older individuals cannot afford to pay. In fact, medical debt is now the biggest single source of bankruptcy filings in the country.

The reasons for the steady increase of older filers is simple. They can permanently wipe out accumulated high medical debt without making any payments, and they can do it very quickly. Medical bills, like credit card bills, are unsecured debt, meaning that the amount owed is not a lien on real estate or other property of the debtor.

Generally, that kind of debt is immediately and permanently discharged in a Chapter 7 bankruptcy. For the elderly population, getting that load off their minds is like a lifesaver. People in that age range are known to fear the pressures of debt collectors as a major problem. They often express great relief to obtain the fresh start given by the federal bankruptcy laws.

The high cost of health care in the country tends to hit the older population even harder than the younger generations. That is due to the transition of some older retirees to fixed income situations and very tight budgetary constraints. A major hospitalization is all that is needed to put their debt load out of reasonable reach.

Under the 2005 Bankruptcy Reform Act passed by the United States Congress, residents of Washington and other states face tougher qualifications for bankruptcy filing. Most elderly people with modest or middle-class incomes do qualify, however, under the "means test" that screens all filers for income qualification.  For older persons who face the bad luck of high medical bills that they cannot pay off, a consultation with an experienced consumer bankruptcy attorney is recommended.

Source: Forbes, "The Reasons More Older Americans Are Filing For Bankruptcy", Tami Kamin Meyer, Nov. 16, 2017

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