When you think of someone with maxed out credit cards, you typically think of a teenager or college-aged person who has a shopping addiction. However, according to a recent study, the “teenager at the mall” stereotype is no longer entirely accurate.
The study was conducted by Demos, a New York City-based research organization. It found that Americans over 50 are the ones struggling with credit card debt, rather than the youngsters. The study found that older Americans in low and middle-income houses who carried a balance for three or more months owed an average of $8,278 in debt.
While it was true that those under 50 carried more debt when a similar survey was conducted in 2008, currently those under 50 carrying a balance for three or more months only owed an average of $6,258.
So, on what is the older generation spending their money? Demos researchers found that half of the older households went into debt to pay for necessities like utilities or groceries. The other half did it to pay for medical bills. A quarter of those over 50 reported that a job loss and the inability to find other work was the reason that they had to go into debt.
Experts say that in this era of Social Security cuts, if this trend continues, the boomer generation may face serious financial problems.
Bankruptcy may help
For those, young and old, who are overwhelmed by credit card debt, bankruptcy may offer a solution, by relieving the obligation to pay many types of debt such as credit cards and medical bills.
Individuals wishing to file bankruptcy can file either Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 bankruptcy, the debtor’s nonexempt assets, such as vacation homes or stocks are sold off to pay his or her debts. However, since many Chapter 7 filers have no nonexempt assets, many filers do not lose any property. Once the sale of the nonexempt assets (if there are any) has been completed, the debtor receives a discharge of many types of his or her debts, meaning that he or she is no longer under an obligation to pay them back.
In Chapter 13 bankruptcy, instead of a sale, the debtor’s debts are paid back in full or partially by a payment plan over a three to five-year period. The debtor’s debts are consolidated into the plan and monthly payments are made towards the debt. The monthly payment amount is determined by the debtor’s disposable income. Once the payment plan has been completed, a discharge is granted for many types of remaining debt.
Consult an attorney
As bankruptcy law is very complicated and full of exceptions, if you are considering bankruptcy, it is smart to contact an experienced bankruptcy attorney. An attorney can assess your situation and advise you on the best debt relief option for you.