Retirement age is supposed to mean financial stability and free from financial worries.
But unfortunately, most of the senior citizen of our nation are not getting the desired financial peace in their golden age.
Well, bankruptcy is one of the most effective debt relief solutions.
Filing bankruptcy can help people to get out of debt, but people should consider it as the last resort. It affects your credit health negatively. On the other hand, filing bankruptcy is not enough, there are many factors that you need to understand.
Bankruptcy gives a chance to debtors to start afresh. In chapter 13, the court approves a repayment plan for the debtor to pay off the debts over 3-5 years. The debtor can keep his/her assets (stuff they own), but they have to agree on a monthly payment plan given by the court.
In chapter 7, the court sells all the debtor's asset including home, car, and other assets (with some exemption) to pay off the money the debtor owes. However, the debtor can only file chapter 7 bankruptcy if he/sher has no or low income and the debt amount is huge. This way, debtors can start afresh.
So, there is no point to filing bankruptcy to protect the assets.
John Mlnarik, an attorney in Santa Clara, Calif. has said “Anyone who files for bankruptcy should have something to protect, whether it is income, an asset or interest in some other exempt property. An individual who is ‘judgment proof’ does not need to file for bankruptcy, so long as they are relatively certain they will remain that way for the remainder of their life (not get a new job, inherit anything or win the lottery). Seniors simply can determine with a greater amount of certainty that they will remain judgment-proof. And creditors, because of a person’s age, are more likely to believe them.”
Most of the retirees have a fixed monthly income; but living cost is rising. Thus, most of them fail to keep up with their bills and accumulate costly debts even in their golden age.
They accumulate costly unsecured debts like medical bills, credit card debt and personal debt with higher interest.
This is why they often file for bankruptcy. Because, debt-ridden seniors want to put an end to calls from creditors.
In this context, Charles R. Gallagher III of St. Petersburg, Fla. has quoted that “
In a Chapter 13 case, depending on the net monthly income and the amount of secured versus unsecured debts, a debtor may be required to pay a portion of the medical bills and other unsecured debt”.
Bankruptcy not the best choice for everyone. Thus, seniors should consult with an efficient lawyer before filing.
For example, social security fund, pensions, and retirement fund are protected and are exempt from debt collections.
If you are still earning after retirement and have debts, then you need to consult with your attorney to choose the best remedy to payoff your debts.