Elderly and Bankruptcy FAQ: What Will Happen to My Benefits and Pensions?

Many older Americans in Oak Park and throughout the country are filing for personal bankruptcy. Indeed, as we have discussed previously, numerous seniors continue to file for bankruptcy due to medical debt. While consumers of all ages may have concerns about what will happen to retirement accounts, pensions, and certain benefits upon filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy, this question is often of utmost importance for consumers who are already in retirement. Generally speaking, Illinois’s bankruptcy exemptions allow debtors to keep most pensions and benefits.
In Illinois, debtors who file for bankruptcy are required to use Illinois exemptions (as opposed to having the option of choosing the federal exemptions). At the same time, certain exemptions for retirement accounts require a closer look at the U.S. Bankruptcy Code. We will provide you with some detailed information aimed at seniors who are thinking about filing for bankruptcy in Illinois.
Seniors Who Receive Social Security and Veterans Benefits
If you are thinking about filing for bankruptcy and are concerned about your Social Security benefits or your Veteran’s benefits, you should know that these benefits are exempt. Specifically, under 735 ILCS 5/12-1001(g), the debtor retains the right to receive Social Security benefits and a Veteran’s benefit.
This is extremely important for older adults as most do indeed receive Social Security benefits. According to a fact sheet from the Social Security Administration (SSA), a snapshot in June 2017 showed that 42 million retired workers were receiving benefits totaling about $57 billion. The average monthly benefit for retirees is $1,369. How many seniors receive Social Security benefits? The SSA reports that approximately 90% of Americans aged 65 and older currently receive Social Security benefits, and those benefits represent around 33% of all income for people in that age group. For more than 40% of the elderly, Social Security benefits account for at least 90% of their income.
What about benefits for elderly veterans? According to the U.S. Department of Veterans Affairs, there are more than 12 million veterans aged 65 and older in the country, and they receive a variety of benefits, such as a monthly pension through “Aid and Attendance” or “Housebound,” and medical benefits through the Geriatrics Program. Seniors in Chicagoland can file for bankruptcy without having to worrying about these benefits being subject to the bankruptcy process.
Retirement Accounts and Pensions
Certain Illinois pensions are also exempt under Chapter 40 of the Illinois Statutes. When it comes to retirement accounts, the U.S. Bankruptcy Code clarifies that tax exempt retirement accounts such as 401(k) accounts and defined benefit plans are exempt. How about traditional IRAs and Roth IRAs? These accounts, too, are exempt, but only up to a certain amount. Generally speaking, the exemption cap is set at over $1,000,000 per person, so seniors who are struggling to pay monthly bills due to medical debt are less likely to be affected by the cap set on traditional IRAs and Roth IRAs. A bankruptcy attorney can tell you more.
Contact an Oak Park Bankruptcy Lawyer
If you have questions about filing for bankruptcy, you should speak with an Oak Park bankruptcy attorney today. Contact the Emerson Law Firm to discuss your situation.
See Related Blog Posts:

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