In today’s economy. with the rising costs of food, housing and medical bills, bankruptcy is increasing among seniors. In previous decades seniors were going into retirement with solid assets, no mortgages and a reliable health care plan. Unfortunately, now many seniors are hitting their retirement years loaded with debt. These financial burdens can be complicated and may even require a bankruptcy case to deal with the overwhelming debt. While it is not ideal to be filing for bankruptcy, it may be the right solution to clear the debt and allow for some peace of mind during the golden years.
Advantages to Seniors Filing for Bankruptcy
- Seniors who have large debt may be dealing with harassing phone calls, eviction or foreclosure notices, and debt collection letters. Filing for bankruptcy can stop all that emotional turmoil.
- Seniors have certain advantages over other debtors in bankruptcy. For example Social Security, Private Pensions, and Life Insurance are protected from being lost in a bankruptcy case.
- Medical debt is one of the leading causes of bankruptcy for elderly citizens. Luckily, it is one of the easiest types of debt to discharge in bankruptcy. In fact, filing for Chapter 7 bankruptcy can wipe out your outstanding medical bills in just a few months. However, keep in mind that bankruptcy only eliminates debts that exist at the time of your filing. As a result, if you are about to incur more medical debt, consider waiting to file your bankruptcy to include all your medical bills.
- For many seniors, their home is their “nest egg”. Fortunately, many states, as well as the federal bankruptcy exemptions, offer debtors a homestead exemption to protect a certain amount of equity in their home. In fact, some states even have a higher homestead exemption limit specifically for senior citizens.
There’s a lot to consider when thinking about bankruptcy relief at any age. Talking to a knowledgeable and experienced attorney is an important first step to taking control of your financial situation.