A recent article in the New York Times illustrated how advantageous the bankruptcy process can be for senior citizens looking to make a fresh financial start and protect their retirement income. The piece featured a 66-year-old retired former nursery owner and plant consultant from Orlando with diminishing income and mounting bills, a problem to which seniors across the country can relate. The retiree said he wanted to get out of debt in time to reorganize his finances and leave something to his grandchildren. What is truly surprising, and unfortunate, is that he said that overcoming the stigma of bankruptcy was his biggest obstacle in initiating the process.
As people get older, they require more medical care; however, their lack of income after retirement means that they can’t always pay for it. This results in mounting medical bills that balloon out of control and sometimes force elderly individuals into bankruptcy. This maneuver, however, can be beneficial to those looking to protect and preserve what limited income they have during their retirement. Without getting this fresh start, seniors run the risk of having their income eaten up by creditors each month, leaving them with very little, if anything, to enjoy the life they’ve worked so hard to build.
The problem is that many people wait several years to file bankruptcy due largely to issues of pride and wishful thinking. The unfortunate reality is that most seniors have limited time and limited money. The more they languish in debt, the more time they waste trying to get creditors off their backs. All of their savings and even their social security can end up going toward paying off debt that they will never fully satisfy. After they file, most seniors’ retirement accounts are protected under bankruptcy, including social security, 401(k)’s, qualified profit-sharing plans and individual retirement accounts worth up to $1.245 million.
While credit and the ability to borrow may suffer, many seniors are not likely to need to take on new debt at their age and can usually stay in their homes by using a homestead exemption.
If you or your older loved one is thinking about filing for bankruptcy, you need an experienced attorney to tell you exactly which type of filing status best applies to your situation and to help you complete the process. Joel R. Spivack has been assisting clients through bankruptcy for years. Call today so he can begin helping you.