Early Retirement and Bankruptcy
In 2009 a record 2.74 million Americans filed for social security benefits and nearly 72% of them were less than 66 years old. What’s happened during this recession is that older workers have found themselves unemployed or unable to find any type of work with a living wage. These workers don’t have large nest eggs sitting in bank accounts and many of them are deeply in debt and facing foreclosure on homes that they spent decades acquiring.
In the midst of their long spells of unemployment, the debtors exhaust their savings and find they have little choice but to apply for social security early. But there’s a catch, social security may not solve their financial problems because if they are under the age of 66 they will not receive their full benefits. For example, if a worker files for social security benefits at 62 years old, he/she will be hit with a 25 percent reduction of their benefits.
Right now the average social security payout is $1,171 per month, which is barely enough to pay the mortgage and related expenses in many parts of this country, let alone other existing debts, healthcare and daily expenses. So what should those taking an early retirement do? Consider filing for bankruptcy. Filing for Chapter 7 bankruptcy will allow the worker to discharge many of their unsecured debts and free up their income to focus on the basic living expenses such as the mortgage payment.
Filing Bankruptcy May Protect Your Assets
Many debtors who take an early retirement fail to protect their assets because they think that creditors won’t go after them because they are on such a fixed income exclusively from a source that is exempt from seizure by creditors. But that won’t stop creditors from putting a lien on the debtor’s house, car or other assets. By filing bankruptcy, the debtor will protect their assets and increase their peace of mind.
If you are considering bankruptcy and would like to set up a free consultation, feel free to contact us today.