Over the past few years more consumers over the age of 65 continue to struggle with outstanding debt. Studies have shown that more seniors are turning to bankruptcy to help deal with their debt troubles. In 2007, close to 7 percent of debtors who filed for bankruptcy were senior citizens over the age of 65. While bankruptcy is an option there are issues seniors should consider before moving forward with the filing.
Seniors who collect Social Security money may have their benefits protected from creditors. While there are federal laws to protect such monies from garnishment, if they are deposited into your bank account the creditor may look to garnish from it. Seniors may need to contact their creditor and let them know their bank account obtains Social Security funds in the event a judgment is issued.
Retirement funds for the most part are protected from creditors in bankruptcy, with a few exceptions. If your pension is a considerable amount you may qualify for Chapter 13 bankruptcy instead of Chapter 7. This will create an affordable repayment plan. IRA’s may be protected under bankruptcy. Some seniors may have concerns about home equity. In most cases it can be protected in bankruptcy with exemptions depending on which chapter is filed.
Seniors who reside at a nursing home may wonder about being rejected if they file bankruptcy. For the most part, this shouldn’t be an issue even though they review financial details of the senior in question. A private assisted living facility on the other hand, may look for additional financial guarantee from a family member to ensure dues and fees can be paid when the filing is completed.
To help determine whether or not bankruptcy is an option, discuss your situation with an experienced bankruptcy attorney.