Should my Elderly Parent File Bankruptcy?

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Should my Elderly Parent File Bankruptcy?

Several times per year, I am contacted by an adult child asking if an elderly parent should file bankruptcy. The scenario is generally that the adult child has taken over the elderly parent’s finances as the elderly parent becomes unable to manage those finances themselves. The adult child is shocked by the amount of unsecured debt the elderly parent has.  Oftentimes the debt is a combination of credit cards and medical bills.  An elderly parent often turns to credit cards to pay for ever-increasing medical expenses. And when the credit cards max out, then the medical bills themselves begin to pile up.

So, as the elderly parent’s health fades and the adult child steps in to manage things, the adult child looks at all options. The circumstances will dictate whether bankruptcy is a viable option.  For example, if the elderly parent’s income is all Social Security and pension income, then creditors cannot garnish or attach those funds, even after they land in a bank account. That is the case without bankruptcy.  If the elderly parent has very few assets – may be an inexpensive car, a retirement account, and some household goods, most states’ exemption laws also protect those assets – bankruptcy is not necessary to gain protection for those assets.  The only reason to file bankruptcy for an elderly parent with all exempt income sources and assets is to stop collection attempts by creditors, which can be very stressful on an elderly parent (and the adult child).  Filing bankruptcy in this situation basically just buys an end to collection attempts.  The creditors will receive a bankruptcy notice, which includes a federal court order to leave the elderly parent alone.  It’s normally very effective at silencing creditors, which may well be worth filing bankruptcy for by itself.  There is one other advantage – it guarantees that the elderly parent’s bank accounts will not get tied up by a garnishment or an attachment.  Even if normally those actions can eventually be negated, it can be very problematic to have a bank account frozen even if only for a couple of weeks.

The other option to consider is attempting to engage the creditors to explain the situation.  Some creditors will respond to such communications and will cease collection attempts.  Others simply will not.  In those situations, many people have hired our law firm to take on the role of contacting the creditors and acting as a point of contact for future collection attempts.  A letter from a law firm does pack a lot more punch than a letter from a family member.  We have found this to be a very effective way to get creditors to back off without filing bankruptcy.  Depending on the number of creditors, WM Law generally charges a flat fee for this service.

Chapter 7 or Chapter 13 Bankruptcy

If the elderly parent is still working or has assets that are not protected from garnishment, then the situation becomes more complicated. In that case, a Chapter 7 or Chapter 13 bankruptcy may be required. In that case, it is very important to try to shield the elderly parent from as much stress of the process as possible.  We typically work closely with the adult child to prepare the paperwork for filing.  We prefer to have the elderly parent involved but work hard to minimize the stress.  If the adult child has financial or general power of attorney, the elderly parent’s involvement can be minimal, especially if the parent is impaired.

Contact WM Law

One of the reasons that WM Law added estate planning and probate practices in 2016 to our longstanding bankruptcy practice is exactly the scenario of an elderly parent.  We are particularly well-suited to delicately handle this situation. If you’d like more information on how to deal with your elderly parent’s financial difficulties, visit us at and also or call for a free initial consultation with one of our attorneys. At WM Law, we are here to help.

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Jeffrey L. Wagoner


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