More elderly Americans are looking to bankruptcy for relief, especially because of the rising costs of healthcare.
Despite there being advantages for senior citizens over other debtors, that does not necessarily mean that bankruptcy is the right choice.
The degree to which bankruptcy can help a person varies on a case-by-case basis.
You might stand to lose a lot of property, or you may not have to worry about it at all.
Additionally, when considering whether to file for bankruptcy, you will have to see how either option — Chapter 7 or Chapter 13 — will affect you and your property.
Each bankruptcy option comes with its own set of pros and cons.
Your Home and Your Bankruptcy in New Jersey
When filing for Chapter 7 bankruptcy in New Jersey, you can potentially seek homestead protection through federal exemptions.
It will depend greatly on the amount of equity you have in your home.
Senior citizens tend to be more at risk of losing a home they own simply because they have already paid off their mortgages or have a large amount of equity in the property.
While some states may protect the entire value of your home, a select few states do not offer any homestead protection — New Jersey is one of them.
In New Jersey, it may still be possible to get homestead protection.
Through a federal homestead exemption, if you have less than $22,975 in equity in your home, you can protect the home.
Otherwise, Chapter 13 will be another option that allows you to keep your home while you continue to pay your mortgage.
Retirement Accounts and SSI in Camden County, NJ
As a senior citizen, you very well may be relying on your retirement account for funding.
The good news is that most retirement accounts are protected in bankruptcy.
Under Chapter 7, all tax-exempt retirement accounts are protected by federal law. These accounts include:
- Profit-sharing and money purchase plans
- Defined-benefit plans
The exemption amount for these accounts is unlimited.
Only traditional and Roth IRAs come with an exemption limit, which is a combined total of $1,245,475.
Under Chapter 13 bankruptcy all retirement accounts are safe.
This is because you get to keep your assets with this bankruptcy option.
As far as Social Security Income (SSI), it is protected under Chapter 7.
With Chapter 13 bankruptcy, your SSI is included in figuring out how much you will pay each month with your repayment plan.
Still Protected Without Bankruptcy?
Filing for bankruptcy may not even be necessary.
Creditors who obtain judgments against you are not allowed to take your Social Security income, and they are only allowed 25 percent of other wages.
That percentage could be even lower if your income is very low.
So, if you do not own your home, do not have a fancy car, and do not have any other big-ticket assets, there is really not much for creditors to take from you.
With most states protecting the basics, you might want to reconsider filing for bankruptcy at all.
Of course, in order to be 100 percent sure of what works best for you, you should speak to an experienced New Jersey bankruptcy lawyer before making any final decisions.
Evaluate Your Options with Camden County Bankruptcy Attorney Joel R. Spivack
In New Jersey, you do not have to look beyond the Law Office of Joel R. Spivack.
Attorney Joel Spivack is the bankruptcy lawyer who will provide you with the tools and guidance to make the right decision when it comes to bankruptcy.
He represents clients across NJ, including Camden, Lindenwold, Pennsauken, and Gloucester Township.
If filing is a viable option for you, Mr. Spivack will navigate the bankruptcy process with you and make sure that you understand what to expect throughout the process.
Call us anytime at (856) 488-1200 or fill out our online contact form to schedule a confidential consultation.
The law firm has an office at 1415 Marlton Pike East, Suite 302, Cherry Hill, NJ 08034.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.