December 17, 2017

Bankruptcy and Families

In a study published in the Harvard Law and Policy Review the global financial crisis and the specific effect on real estate, is putting different stresses on families in bankruptcy than in times past.

Broken inter-generational safety netsConceptual image - help in a crisis situation

“Specifically, when young adults experience financial struggles, they often rely on their parents for help because parents usually have more assets and fewer expenses. But the bankruptcies of older Americans may signal the loss of intra-family safety nets for their children and grandchildren alike. These changes may alter traditional social structures, reducing the number of families who can manage periods of financial stress without turning to public resources.”

We see this inter-generational stress every week at Mitchell & Culp and are careful to help families navigate these troubled times with accurate information and professional legal representation.

I’m especially moved by the men and women in their 70s and 80s who lived through the Depression and can’t bear to miss a payment.  I recall an elderly woman who insisted on paying her debts until I  sat down with her and worked out a budget, showing the woman that she would have to choose between her bills and buying food.  It’s an ego-deflating thing for them. That really bothers me. And believe it or not, it happens a lot.

Stranded in homes under water

The Harvard report continues: “Our previous research indicated that medical problems are implicated in many of the bankruptcies of senior citizens.  More recent issues, however, may foreshadow even greater numbers of bankruptcies among older debtors. The data we report on here were collected before the sharp reverses in the stock market that devastated many retirement plans. People who had assets to cushion the blow of rising housing costs or to deal with the unpaid portion of medical bills may now find themselves taking on debt, debt that makes them vulnerable for future bankruptcies. Even seniors with no investments in the stock market and homes that are paid off may find themselves sharply constrained. For example, reports have surfaced about rising numbers of elderly who cannot move into retirement communities because they cannot sell their homes; as a result, retirement communities have too many vacancies and older people who need care facilities are stranded in their homes.”

It isn’t just you

We highlight research like this to counteract the tendency people have to believe what they are experiencing is unique.  It is not.

We see families falling victim to fraudulent and ineffective debt consolidation schemes and encourage those in financial difficulty to consult with us before making any decisions.  The initial consultation is free.