With the cost of living increases, inflation, and rising healthcare costs, it’s no wonder why some senior citizens file for bankruptcy relief. If you’re a senior citizen who is considering filing a Chapter 7 or Chapter 13 bankruptcy, you will have some unique factors to consider, which don’t necessarily impact younger generations until they reach retirement age.
Chapter 7 can be a great way to wipe out unsecured debt, such as hefty medical bills and credit card debt, which can be very alluring to seniors. However, not everyone qualifies for Chapter 7 relief. In order to qualify, you must pass the “bankruptcy means test,” and even if you do, you may need to consider if there is any equity in your home and if so, if it’s at risk if you file a Chapter 7.
If you don’t have very much equity or if your house is upside-down or if you don’t own a home, then filing for bankruptcy relief just might make sense for you and your circumstances. This is something we can help you better understand.
Does Bankruptcy Make Sense?
If you’re swimming in debt and see no end in sight, you should consider your bankruptcy options. If you’re wondering if bankruptcy will be beneficial for you, here are some of the questions we would ask you:
- Is the type of debt you have dischargeable in Chapter 7? Such debt includes medical debt, credit card debt, personal loans, utility bills, and older taxes.
- Are you trying to protect your home from foreclosure?
- Is there equity in your home and if so, is it exempt (protected)?
- If you have to liquidate some property to pay off creditors, will enough debt be discharged to make it worth it?
- Will you pass the bankruptcy means test or will you have to file a Chapter 13 instead, which involves a 3 to 5-year repayment plan?
“What about my Social Security retirement benefits? If I don’t file bankruptcy, can they be garnished to pay off my debts?” According to AARP, “Social Security benefits are protected when it comes to private debt like medical costs, car loans and credit card bills. Creditors in such cases can get a court order to garnish money from your work paychecks or bank accounts, but federal law prevents them from touching Social Security benefits.”
To find out if bankruptcy is right for you as a senior, we invite you to contact Dethlefs Pykosh & Murphy at (717) 559-0271 for a consultation.