Personal Bankruptcy and America’s Seniors

According to a recent article in the New York Times, many of America’s senior citizens are facing enormous debt loads, and personal bankruptcy may be a way to help protect their assets. To be sure, consumer bankruptcy “can be a valuable tool to protect retirement assets,” and it is certainly an option to which more older adults should give serious consideration.
Do you have questions about filing for Chapter 7 bankruptcy? Don’t hesitate to speak with an experienced Oak Park bankruptcy lawyer. An advocate at the Emerson Law Firm can answer your questions today.
Seniors Can Still Hit the Financial “Reset” Button
For many seniors, filing for Chapter 7 bankruptcy means an opportunity to “hit the financial reset button.” How do older adults get into situations in which they have unmanageable debt? A number of elderly Illinoisans end up with significant debt from medical expenses or providing money to their children. No matter what the reason might be, personal bankruptcy can provide relief from the anxieties associated with debt and concerns about living a comfortable life during retirement.
When it comes to filing for consumer bankruptcy, one of the biggest obstacles for seniors is the stigma. Indeed, “anecdotal evidence suggests that shame at being in financial turmoil frequently prevents retirees from getting help early.” According to Deborah Thorne, an associate professor of sociology at Ohio University, “people usually postpone bankruptcy for several years before filing.” This tendency can be harmful, however, particularly for older Americans who are concerned about retirement assets.
As Thorne explains, by continuing to spend retirement assets in an attempt to manage debt, “retirees risk a downward financial spiral from which they are less likely to recover than younger people.” Instead of using such assets to pay down debt, older adults should be defending their assets and considering ways to protect themselves.
Retirement Income and Consumer Bankruptcy
Why should seniors focus on the tool of bankruptcy instead of using retirement savings to pay down medical and other debts? Under federal law, “retirement income and saving are usually untouchable during bankruptcies.” In other words, a retiree can file for Chapter 7 while largely being able to protect his or her retirement assets. Specifically, Social Security payments, pensions, 401(k) accounts, qualified for-profit sharing plans, and individual retirement accounts (IRAs) up to $1.245 million “are exempt from creditors.”
For seniors who have concerns about losing their homes, it is important to remember that a homestead exemption can help to protect their real property. The Illinois homestead exemption is $15,000, and it can be doubled for married couples.
Retirees should also think about negotiating with creditors. While it is important to have an experienced advocate on your side to help with this process, you should remember that creditors know they cannot obtain money from most retirement assets, and thus they may be more willing to negotiate.
While your credit score will be affected when you file for personal bankruptcy, it is entirely possible to bounce back—even if you’re at retirement age. Rebuilding your credit after a Chapter 7 bankruptcy may be easier than you think. You should be sure to discuss your particular situation with an experienced Chicago bankruptcy attorney. Contact us today to learn more about how we can help.
See Related Blog Posts:
Questioning Bank of America’s Consumer Relief Measures

Comments

Post a Comment

Popular posts from this blog

New Information on Debts That Bankruptcy Cannot Discharge

If you are thinking about filing for bankruptcy in the Oak Park area, it is important to know that certain kinds of debts cannot be discharged in a bankruptcy case. Under U.S. bankruptcy law, these are known as non-dischargeable debts, or exceptions to discharge. There are certain types of debts that have long been identified clearly as non-dischargeable debts, while there are misconceptions about other types of debts that may or may not be dischargeable. As an article in CNBC discusses, the U.S. Supreme Court recently issued a ruling in the case of Bartenwerfer v. Buckley , which clarifies that debts incurred due to another party’s fraud cannot be discharged in an individual’s bankruptcy case. Our Oak Park bankruptcy attorneys can explain the Court’s recent ruling and provide you with additional information on dischargeable and non-dischargeable debts. Supreme Court Says Debt Incurred Due to Another’s Fraud is Non-Dischargeable The recent Bartenwerfer case involved a debtor attempti
Read more

Learning About Different Types of Wills

Whether you are young or old, single or married, wealthy or with limited financial means, healthy or dealing with a medical condition, it is important to make a will. Many people have incorrectly heard that wills are only necessary for particular people, such as those with a substantial amount of assets or for older adults in poor health. Yet wills are critical for adults of all ages, and an experienced Oak Park estate planning lawyer can help you to make one. Before you begin working with a lawyer on a will, you might start conducting your own research into wills in Illinois and the requirements for a valid will. In so doing, you are likely to come across information about many different types of wills, and you are probably going to wonder whether you will need more than one kind of will. In short, there are different terms that can be used to describe the form or function of a will, as well as some distinct types of wills. Our Oak Park estate planning attorneys can explain in more
Read more

Younger Parents Need an Estate Plan

It is critical for younger parents to have an estate plan, even if they know they are healthy and do not anticipate that anything will happen in the near future. Much too often, younger parents assume that they can wait until they are older to consider estate planning or until there is a health-related reason to begin the estate planning process. Yet estate planning is critically important for parents who have minor children. While estate planning is important for adults of all ages, it can allow parents to make important decisions about who will care for their children in the event that they become unable to do so themselves. Our Oak Park estate planning lawyers can explain in more detail. Naming a Guardian for Your Minor Children in Your Will Most importantly for younger parents, making a will allows you to name a guardian who can care for your child in the event of your unexpected death. Nobody anticipates a deadly accident or a sudden situation in which there is a need for another
Read more