Debt problems can effect people at all ages. Failing pensions, rising cost of health care and the general weakness of the economy can cause the financial “perfect storm” – especially for the elderly. Seniors should be enjoying their golden years but unfortunately unforeseen circumstances can lead many to consider filing for bankruptcy. Always discuss your situation with a qualified bankruptcy attorney to weigh what options might be best for you. Here are some questions you may want to consider when deciding whether to file for bankruptcy:
- What are the types of bankruptcy and which is right for my age and situation? In Chapter 7 bankruptcy you discharge most or all of your debts and turn over nonexempt assets to the bankruptcy trustee who will sell the property and use the proceeds to pay your creditors. This is often called a liquidation bankruptcy. In Chapter 13 bankruptcy, you keep your assets and property and repay some of your debts through a payment plan that lasts either three or five years.
- Are Social Security funds protected? Federal law protects Social Security money from garnishment, whether seniors file for bankruptcy protection or not. In Chapter 13 bankruptcy, your Social Security income is included when determining how much you must pay each month through your repayment plan. Read More
- Are retirement funds protected? Like Social Security, most retirement vehicles such as 401(k)s, 403bs and pensions are exempted under federal bankruptcy law. That means creditors can’t touch those assets in a bankruptcy. Seniors with particularly hefty pensions, however, may not be eligible for Chapter 7 liquidation, and instead may be forced to file a Chapter 13 repayment plan.
- Is my home at risk? According to BankruptcySite.org in Chapter 7 bankruptcy, if you have significant home equity that is not covered by a homestead exemption (an amount that is protected in bankruptcy) the bankruptcy trustee will sell your home to pay your creditors. Often, seniors are more at risk of losing their homes since many have paid off their mortgages or have large amounts of equity in their homes. In Chapter 13 bankruptcy, you keep your home as long as you continue to pay your mortgage. Chapter 13 also provides a method for paying mortgage arrears.