The Nationwide Phenomenon Some Are Calling Gray Bankruptcy

TRI Writer • June 18, 2020

Did you know that “gray” bankruptcies are on the rise ? The number of Americans over the age of 65 that file bankruptcy has more than tripled since 1991.

Why Are So Many Seniors Filing Bankruptcy?

There are many factors that experts consider as contributors to the “gray” bankruptcy phenomenon. Possible contributing factors include eroding Medicare and Social Security benefits, shifts away from defined benefit pensions, increasing health care costs, and more. There are a wide variety of options if you’re looking for economic and societal changes that contribute to the financial woes of modern-day seniors.

But What About Seniors and Gray Bankruptcy?

According to a recent study from Consumer Bankruptcy Project researchers, the number of Americans aged 65 to 74 that filed bankruptcy doubled since 1991. And the number of Americans over the age of 75 that filed bankruptcy tripled. One out of every seven bankruptcy filers in the United States is aged 65 or older. The numbers indicate an increase of close to nearly five-fold in the space of just twenty-five years, and that constitutes a notable demographic shift. The study was based on surveys collected from February 2013 and November 2016. The study collected data from 3,200 people who declared bankruptcy.

What Are Some of the Most Common Causes of Gray Divorce?

When the study participants were asked about the reason or reasons they decided to declare bankruptcy. Study participants that fell into the senior age range often cited medical expenses and general debt. One study participant’s answer indicated that his wife experienced medical issues that led to her leaving her job, which resulted in a loss of income. Two years later, the husband himself developed medical problems and had to stop working. The couple soon found themselves unable to handle their debt load. After the situation escalated to constant collection calls, they contacted a bankruptcy attorney for help. This particular example of the  62.2% of study participants in the senior age group identifying medical expenses as the reason they filed bankruptcy, many of which also blamed reduced government benefits and medical tests not covered under insurance.

If you are considering filing personal bankruptcy and you aren’t sure if it’s the best decision for your situation, please don’t hesitate to get in touch with our experienced bankruptcy attorneys to discuss your options. Most bankruptcy offices in the Chattanooga area don’t have a single Consumer Bankruptcy Specialist on staff. Our office is the only one in Chattanooga with two. You are in good hands with Kenneth C. Rannick P.C.

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Subchapter 5 Bankruptcy: Unlocking New Possibilities for Tennessee Residents

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Are you a Tennessee resident facing financial challenges and considering bankruptcy? If so, you may have heard about a relatively new option called Subchapter 5 bankruptcy. But what exactly is Subchapter 5 and how does it differ from traditional Chapter 11 bankruptcy? More importantly, what benefits does it offer to individuals and small businesses?  In this blog post, we will explore the world of Subchapter 5 bankruptcy and shed light on its advantages for Tennessee residents. Whether you're a struggling entrepreneur or an individual burdened by overwhelming debt, understanding the potential benefits of Subchapter 5 can help you make informed decisions about your financial future. What is Subchapter 5 Bankruptcy? Subchapter 5 is a relatively recent addition to the United States Bankruptcy Code, specifically designed to provide a streamlined and cost-effective bankruptcy process for small businesses and individuals. It was created as part of the Small Business Reorganization Act (SBRA) in 2019, with the aim of increasing accessibility to Chapter 11 bankruptcy relief. The Benefits of Subchapter 5 Bankruptcy Simplified Process: One of the key advantages of Subchapter 5 is its simplified and faster bankruptcy process. Unlike traditional Chapter 11 bankruptcy, which can be complex and costly, Subchapter 5 offers a more streamlined approach that is better suited for small businesses and individuals. Retention of Ownership: Under Subchapter 5, business owners have the opportunity to retain ownership and control of their company while developing a repayment plan. This allows for greater flexibility and the ability to restructure debts without losing ownership interests. Reduced Plan Requirements: Subchapter 5 eliminates certain stringent plan requirements that are typically associated with traditional Chapter 11 bankruptcy. This simplification of the plan process makes it more accessible to small businesses and individuals. Debt Repayment Plan: Subchapter 5 allows for the development of a debt repayment plan based on the individual's or small business's disposable income. This plan spans over three to five years, making it more manageable and achievable for debtors. Creditor-Friendly Approach: Subchapter 5 encourages creditor participation and collaboration, promoting consensual resolutions and a more amicable environment. This can lead to increased cooperation, reduced litigation costs, and ultimately, a more successful restructuring process. Subchapter 5 vs. Chapter 11 Bankruptcy: Understanding the Difference While both Subchapter 5 bankruptcy and traditional Chapter 11 bankruptcy share some similarities, there are significant differences between the two. The primary distinction lies in the complexity, cost, and requirements associated with each option. Subchapter 5 offers a more simplified and accessible bankruptcy process specifically tailored to the needs of small businesses and individuals, while Chapter 11 is better suited for larger businesses with more complex financial structures. If you're a Tennessee resident grappling with financial difficulties, Subchapter 5 bankruptcy may provide a viable solution. Its streamlined process, reduced plan requirements, and debtor-friendly approach make it an attractive option for small businesses and individuals seeking relief from overwhelming debt. Before making any decisions, it's essential to consult with a qualified bankruptcy attorney who can guide you through the process and help determine the best course of action for your specific situation. Remember, bankruptcy is not a one-size-fits-all solution, and the outcome will depend on various factors. However, understanding the potential benefits of Subchapter 5 bankruptcy can empower you to make informed decisions about your financial future. At Kenneth C. Rannick, P.C., we specialize in bankruptcy law and can provide the guidance and support you need during challenging times. Contact us today to schedule a consultation and explore your options for a fresh start. Take control of your financial future with Subchapter 5 bankruptcy. Let us help you navigate the path to a brighter tomorrow.

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