Given the increasing prices associates with health care, a large number of senior citizens have begun to file for bankruptcy. What some people do not know is that senior citizens who file for bankruptcy are offered a number of distinct advantages. Despite this, bankruptcy is not the best option for everyone.
Why Bankruptcy is Not Always the Best Option
Pursuing bankruptcy can be an attractive option for some senior citizens because it enables them to erase debts and pursue a better credit history. For some senior citizens, however, filing for bankruptcy is not the best option. Some of the situations in which senior citizens should think twice before filing for bankruptcy include:
- A senior citizen might not have anything that a creditor can take. Because many senior citizens have already paired down what they own, they are “judgment proof” and bankruptcy does little good.
- A senior citizen might have too many assets to benefit from bankruptcy. When a person owns too many valuable items that are not protected from creditors, filing for bankruptcy can result in the loss of that property. An individual is vulnerable to losing property in Chapter 7 bankruptcy and may only be able to obtain a reorganization plan with high monthly payments through Chapter 13 bankruptcy.
When is Bankruptcy a Good Idea?
Even though bankruptcy is not a good idea for everyone, bankruptcy can be a good idea for some older individuals. Some of the important considerations for senior citizens when filing for bankruptcy include:
- Are my debts primarily related to credit cards or medical bills? These are two of the most easily discharged types of debts. Many individuals with these types of debts are capable of erasing qualifying debt within a few months through Chapter 7 bankruptcy.
- Am I interested in protecting home equity? A large number of senior citizens have significant equity in their home. Florida’s homestead exemption protects a certain amount of equity but often does not cover the entire value of a home.
- Am I interested in protecting a retirement account? In accordance with federal bankruptcy law, most tax-exempt retirement accounts are exempt in bankruptcy.
- Am I interested in protecting Social Security benefits? A creditor can not take Social Security benefits outside of bankruptcy. Once these amounts are commingled with other funds, however, their bankruptcy protection is lost. Social Security benefits are also not counted as income for bankruptcy qualification, but the amount received monthly must be listed in a bankruptcy budget.
Speak with an Experienced Bankruptcy Lawyer
If you are a senior citizen who is considering filing for bankruptcy, it is a wise idea to discuss matters with a knowledgeable bankruptcy lawyer first. Contact the Adam Law Group today to schedule an initial free case evaluation. We have helped a number of senior citizens navigate the bankruptcy process and know what it takes to make sure that your case resolves in the best possible manner.