Retired and Unable to Pay Bills: Is Bankruptcy an Option?

Sadly, too many people today are finding that a weak economy makes it more difficult than ever to retire, making bankruptcy an option that some must consider. The question is, will it help or hurt their financial future, even though that future is shorter than ever? The answer is not always clear-cut, but in general, there are a number of protections in place to keep bankruptcy from destroying the pensions, and therefore the future, for seniors.

Bankruptcy Benefits

For retirees, it may became more and more difficult to pay for medications, keep up with credit card payments, and meet the ever-increasing cost of living with a fixed income. Many resort to using credit cards to purchase consumable items, worsening their debt situation even further. In today’s economy, many still have mortgage payments, as well. Bankruptcy may be a solution, but there are a number of elements to consider. The benefits of bankruptcy include:

A discharge of many unsecured debts, such as credit cards, under chapter 7; however, there is a chance that they may lose personal property, such as their home. Those who file chapter 13 will probably keep their home, but may not be able to discharge as much of their unsecured debt

Eliminate some liens on property in certain situations, although it may take the expertise of a bankruptcy lawyer to fully realize this benefit

End harassment from creditors

Protect IRA’s up to a total of over $1 million

There are ways for seniors to save their homes in either type of bankruptcy, whether chapter 7 or chapter 13. Everyone’s situation is different, and an attorney can assess the needs of their client and provide the best recommendation.

Bankruptcy Limitations

There are some debt consequences that one or both forms of bankruptcy may not be able to alleviate. It is important for a senior to examine these limitations and determine if filing a bankruptcy petition is worth it. A retiree has little time to repair their credit score, which may damage or eliminate their ability to leave any inheritance for their children or grandchildren. Some of the most obvious limitations include:

Protecting property that is security for a loan. The debt may be discharged under chapter 7, or the property protected in chapter 13, but if the filer does not continue to make agreed upon payments, the lien holder may still repossess or foreclose on the property

Discharging tax debts. Most of those will remain even after a bankruptcy petition

Getting Legal Help with Bankruptcy Retirement

It is more important for seniors to examine their options for bankruptcy than anyone else. Their future is short and the effects of bankruptcy might not be erased within their lifetime. However, in some situations, bankruptcy may provide the relief they need to have some peace and protection in their retirement years. The key requirement may be to obtain expert legal advice before making this important decision and learning how to get the most out of the option they choose.

Think Bankruptcy Might Be for You?