An increasing number of retired people are finding themselves faced with more debt than they can handle, and are faced with a decision: is bankruptcy a solution to their financial problems?

Many people find that when they retire their income decreases and they find themselves using credit cards and bank loans to pay their monthly expenses. On a fixed income it is difficult to make the payments on their debts, and then they find that they are getting calls from collection agents and bill collectors. It is very stressful, and they don't know what to do.

When retired or elderly people are faced with debt problems, they have a number of options.

First, they could try to repay the debts on their own. It may be possible to cut expenses to free up cash to service the debts. It may be possible to sell assets they no longer require, such as a car they no longer drive, or a house that is larger than they need.

Second, they could ask family members for help. This is a good option, but it is often embarrassing to go to your children to ask them for help.

Third, they could try to get a debt consolidation loan to consolidate their debts into one monthly payment. This is usually difficult, because on a fixed income it is difficult to make the payments.

Fourth, they could try a debt management plan through a not for profit credit counselor who will negotiate a repayment plan. Again, it is difficult to make large monthly payments on a fixed income.

The next option for residents of Canada would be to try a consumer proposal, or Americans could try a Chapter 13 Wage Earner Plan. This provides protection from your creditors, but also involves potentially difficult monthly payments.

The next option is personal bankruptcy. A bankruptcy eliminates the debts and provides protection from the creditors, but also carries various obligations, including payments as part of the bankruptcy process.

The final option is to do nothing. One of the main reasons for filing bankruptcy is to prevent your creditors from garnisheeing your wages or seizing assets. If you are retired and receiving pension income, you have no wages that can be seized, and if you don't own a fancy house or car, you may not have any assets that can be seized.

In other words, if you have nothing that needs protecting, you may not need bankruptcy protection.

You could open a new bank account at a new bank (to prevent your bank from helping themselves to unauthorized payments) and you could get a new, unlisted phone number (to prevent those annoying calls from collection agents).

Doing nothing is a stressful option, but for a lot of people it is the correct and least costly option.

Before deciding on any of these options you should consult a bankruptcy trustee, bankruptcy attorney, or other trusted financial advisor to review your options and determine which option is correct for you.