When Arizona residents think of people struggling with debt, they may think of people in their twenties and thirties, looking for jobs, trying to pay off college loans while paying credit card bills and mortgage payments. However, the surprising fact is that senior citizens are facing all these difficulties at an alarming level; between 2007 and 2011, 3.5 million loans held by people over the age of 50 were underwater and 1.5 million seniors lost their homes. 2.2 million people across the country over the age of 60 are still paying off their student loans, with an average balance of $19,000 remaining on those loans.
And just like their younger counterparts, senior citizens also have turned to credit cards, which eventually has become a leading cause in bankruptcy filings for seniors. Bankruptcy filings shot up between 1991 and 2007-these rates rose by 178 percent for people aged 65-74 and 567 percent for elderly people over the age of 75. When it comes to filing for personal bankruptcy, debtors can either file for Chapter 13 or Chapter 7 bankruptcy in order to wipe out most of their bills.
Those who have filed for bankruptcy have seen most of their debts reduced or discharged, but those who remained dedicated to paying off their bills and passed away in the process may have left behind their debt for their family members to inherit. Family members cannot inherit all kinds of debt, but some debt, especially those for which family members have co-signed, ma be passed on to heirs.
Student loans are tricky areas, as many family members cosign student loans; once the student passes on, family members may be left with the remaining balance. In addition to this, all states treat debt differently-in community property states, just like assets are considered joint property of a couple, debts are also considered joint property and may fall upon the surviving spouse to pay off, whether they co-signed or not.
When taking on further debt, Arizona residents should consider not only their existing debts, but also their age, not only for their own peace of mind, but also for their loved ones. They should also be aware that filing for bankruptcy to wipe out their debts may be the beneficial solution not only for them, but also for their family members in the event of an untimely death.
Source: Daily Finance, "Inheriting debt: How to deal when you're left a money mess," Adam Wiederman, June 24, 2013
