Bankruptcy During Your Golden Years

Posted on: 29 May 2019

It might be somewhat ironic that advances in medical science have contributed to living longer but have caused higher medical costs while doing so. Medical bills are but one issue senior citizens face as they move away from their income-earning years and into retirement. The cost of housing, groceries, and utilities also continue to rise and affect those that have insufficient means of adjusting their earnings. If you are on a fixed income and financial problems are afflicting you, you might have considered taking the step of declaring bankruptcy. To find out about this issue, read on.

Secured and Unsecured Debts

When it comes to filing a chapter 7 bankruptcy, there are two types of debts. Secured debts are attached to property. For example, an auto loan is attached to the vehicle itself and a mortgage is attached to the real estate. If you fail to make payments on a secured debt, it can be repossessed or foreclosed upon. Bankruptcy may not help you hang on to your car or home if you are behind; however, it might make things better for you indirectly. Unsecured debts are not attached to property. Medical bills, credit cards, and personal loans have no collateral so no property is lost if you fail to pay them. If you owe money on these bills and file a chapter 7 bankruptcy, those debts are discharged and are no longer your responsibility. If the money you are spending to keep up with your unsecured debts could be put to better use paying for your secured debts, bankruptcy might be right for you.

Real Estate Exemptions

Even if you are not behind on your mortgage or your home is paid off, you might be at risk of losing it, depending on your state's homestead exemptions. Exemptions are a sum of money that is used to theoretically reduce your home's value. If the home is worth less than the exemption, you can keep it. If you file jointly, some states allow you to double your exemption. Losing a place to live at an older age can be particularity devastating. Speak to a bankruptcy lawyer to find out how your home would fare with a chapter 7 filing.

Another important issue for seniors is their retirement accounts. Some forms of investment accounts are protected against bankruptcy and some are not. Additionally, intermingling protected investments and non-protected ones may put some of your retirement at risk. Speak to a chapter 7 bankruptcy attorney about this complicated issue and know what's at stake before you file.