Across the country, and especially in Michigan, the poor economy, healthcare costs, and the fear of foreclosure loom over the heads of many seniors. Unlike in the past, many seniors are having to consider Bankruptcy as part of their retirement plan. The reality is that once an individual is retired and living on a fixed income, it simply may not make sense for them to take money out of their retirement account to pay off large amounts of medical or credit card debt. In fact, that plan will spend down their nest egg and their withdrawal will be taxed as income.
When it Makes Sense for Seniors to File for Bankruptcy
If you, or someone you know, is a Senior with pressing medical bills and credit card debt, then it make sense to file for Bankruptcy. Many Michigan Seniors have rapidly increasing credit card debt. The reason for this is two fold: credit cards can be used to pay medical expenses and the usury laws in most States have been rescinded. In other words the interest rates are very high. In the past, a 25% interest rate on a loan was criminal usury. Now, however, credit card companies can charge rates even higher than 25%! These are almost impossible to pay off, especially on a retirement income. Filing for Bankruptcy is nothing to be ashamed of. Bankruptcy has helped many people by giving them a fresh start to their new lives without the burden of overwhelming debt. (See also help for senior citizens struggling with credit cards).
Seniors and Exempt Property
Up to one million dollars in assets in IRAs and other qualified retirement accounts are exempt property. Exempt property is property that creditors are not entitled to take from you to satisfy a debt. Seniors can discharge their debts while keeping their retirement income for basic living expenses. This becomes increasingly important as the number of people who retire is increasing and there is serious concern that social security payments may be reduced.
Bankruptcy is available to seniors and can be a helpful tool for planning ahead for retirement or for improving the quality of life for those already in retirement.