An increasing number of senior citizens and retirees are filing for bankruptcy. A challenging economy affects everyone, regardless of age or income. But people at or near the end of their working years may face added financial burdens.
Solutions to these problems aren't easy to sort out. For many, bankruptcy is the answer. It can relieve financial worries and restore security to your golden years.
Facing Financial Crisis
It's unfortunate that many people who worked hard and saved all their lives fall into serious financial trouble in their retirement. At a time when they should be enjoying hobbies and grandchildren, these folks worry about unpaid bills.
Circumstances that commonly force seniors into economic difficulty include:
- Mounting medical bills and prescription drug costs
- Lowered insurance coverage and higher deductibles and out-of-pocket expenses
- Death of a spouse
- Helping adult children with education or living expenses
- Helping raise grandchildren
- Unemployment late in career
- Losses in real estate, the stock market or other investments
- Victims of predatory lending or other scams
- Reduced pensions
- Fixed retirement income not keeping pace with rising cost of living
- Living longer means having to fund more retirement years
How Bankruptcy Can Help
Bankruptcy laws have special provisions that help senior citizens. For example, Social Security benefits are beyond the reach of creditors in bankruptcy cases. Private pensions and life insurance assets are also given protection.
Depending upon your situation, filing for bankruptcy could help you:
- Stop harassing phone calls, letters and bills from creditors
- Stop foreclosure and eviction lawsuits
- Protect your home, vehicle and some personal property from collection actions
- Reduce debt payments or extend the time for paying off debts
- Eliminate some debts altogether
Bankruptcy and Retirement
There's a lot to consider when thinking about bankruptcy relief at any age. When you or a family member are at or near retirement, some important questions to ask yourself are:
- Are you still working?
- What are your sources of income?
- What type of debts do you have - mortgage, car loan, credit cards, etc.?
- What exemptions do you have if you file for bankruptcy? Exemptions may prevent creditors from taking retirement accounts, Social Security benefits and home equity
Take Action Early
Don't ignore your financial problems. Debts can mount quickly and easily get out of hand. Watch for signs that an elderly parent or grandparent might be trying to hide financial problems. These may include:
- Avoiding talk about finances
- Letting bills and mail pile up
- Cutting back on necessities like medication, groceries and utilities
- Selling off valuables
- Picking up odd jobs
Talk to Your Attorney
Talking to a knowledgeable and experienced attorney is an important first step to taking control of your financial situation. Attorneys especially good at helping the elderly include those with expertise in:
- Bankruptcy law
- Elder law
- Estate planning
It's possible that bankruptcy could be the answer to salvaging your retirement plans. Discussing your options with an attorney is the best way to find out if bankruptcy is right for you.
Questions for Your Attorney
- I was unemployed late in my career, and I racked up credit card and medical bills I can't afford. My two biggest assets are my paid-for house and my retirement accounts. Should I think about bankruptcy?
- How would the payments my mother receives through her reverse mortgage be treated in bankruptcy?
- I help manage my parents' financial affairs. There's a good age difference between them. What planning can be done so their assets last for both their lives?