At its core, bankruptcy is about providing the debtor with a fresh start. Debts are forgiven and the debtor is allowed breathing room to get back on track. But with seniors, bankruptcy raises some unique questions, says John Mlnarik, an attorney in Santa Clara, Calif.

"Anyone who files for bankruptcy should have something to protect, whether it is income, an asset or interest in some other exempt property," Mlnarik says. "An individual who is 'judgment proof' does not need to file for bankruptcy, so long as they are relatively certain they will remain that way for the remainder of their life (not get a new job, inherit anything or win the lottery). Seniors simply can determine with a greater amount of certainty that they will remain judgment-proof. And creditors, because of a person's age, are more likely to believe them."

Whether filing for bankruptcy protection is worth it for a senior varies with each individual case. Seniors with assets to protect can expect to pay around $1,500 for legal help, says Powell. And even when the filer doesn't have much in the way of assets, some seniors file simply to put an end to calls from creditors.