When Should Retirees File Bankruptcy?

 Posted on December 00, 0000 in Chapter 13 Banruptcy

Retirement is often considered a chance to sit back and relax—a long-awaited opportunity to spend time with your grandchildren, take a dream vacation, or busy yourself in the garden. However, your pension may not have gone as far as you had hoped, you were burdened with expensive medical bills, or perhaps you just fell on hard times. Sadly, this is all too common and countless U.S. seniors are grappling with overwhelming debt. Filing for a Chapter 7 or Chapter 13 bankruptcy, however, may be the answer.

According to the The New York Times, bankruptcy is a chance to hit the financial reset button. It is an opportunity to rebuild your life, and to ensure you leave behind money—not debt—for your grandchildren.

Protecting Your Assets 

In tough times, seniors may be tempted to spend their retirement assets. However, retirees risk a downward financial spiral from which they are very unlikely to recover. A better strategy may be to protect those assets by filing for bankruptcy.

When filing for bankruptcy, these assets are usually untouchable. Pensions, 401(k)s, individual retirement accounts, Social Security payments, and qualified profit-sharing plans are exempt from creditors. Moreover, seniors can also avoid losing their homes by using a homestead exemption which protects the equity of principal residence in a bankruptcy.

The choice between filing Chapter 7 or Chapter 13 bankruptcy is a decision that is best left to a professional. As a general rule, if you do not have many assets or a high income, then Chapter 7 bankruptcy is preferable. However, high-income filers typically opt for Chapter 13, which is a repayment plan.

Consider Your Options 

It is important to note that some of your income is still protected even without bankruptcy. Creditors who get judgments against you cannot take your Social Security income and are limited to taking 25 percent of your other wages.

If you are planning to file for either a Chapter 7 or Chapter 13 bankruptcy, please contact a knowledgeable and skilled McHenry County bankruptcy attorney. The Thomas Law Office brings more than 16 years of experience to every case, and we can help you avoid mistakes that could compromise your interests when filing for bankruptcy. Call 847-426-7990 to schedule your consultation. Source: http://www.nytimes.com/14/business/retirementspecial/bankruptcy-can-help-seniors-protect-assets.html?_r=0