Even pensioners and the elderly have debt problems and bankruptcy can be a valid solution for handling those problems.
Increases in the cost of medical services have more impact on elderly citizens who are limited to fixed incomes with no opportunity to work for more money.
Bankruptcy can bring an end to your outstanding medical bills
If you are an older person who has accumulated high medical bills, and don’t expect any further expensive medical treatment, an application for Chapter 7 bankruptcy may be the ideal solution to your problems. Medical debt is one of the simplest kinds of debt to be discharged in bankruptcy. If you are expecting the arrival of another big medical bill, wait. Only the debts already incurred before making your application can be included in your bankruptcy
Beware, once you have filed for bankruptcy, you won’t be able to borrow money until you are released, and even then it could be very hard to persuade anyone to provide services (including medical services) without payment up front.
Your home when it comes to bankruptcy
For anyone who has spent their working lives dedicated to paying off and owning their own home, bankruptcy is a very scary prospect. Can you lose your home? Depending on which state you live in and whether or not federal laws apply, there may be some level of exemption over your home. If there is an exemption, what this means is that some or all of the equity you have in your home will be protected property and not part of the property that the trustee in bankruptcy can seize. You will need to get advice about whether or not your home can be exempt before filing for Chapter 7 bankruptcy.
Your retirement accounts when it comes to bankruptcy
Thankfully, federal bankruptcy law exempts most legal tax exempt retirement savings accounts, so if you have set up 403(b)s, 401(k)s, money purchase, profit-sharing or a defined-benefit plan, that money should remain yours to use even after you declare bankruptcy. Roth IRAs and IRAs are also given protection to a value over $1.2m, and that value is reviewed every three years at the start of the tax year.
These exemptions only apply to retirement funds that are considered legitimate. If you have a large savings account that has never been set up or recognised as a retirement fund, that money won’t be protected and you can lose it in bankruptcy.
Bankruptcy Means Test does not include benefits from Social Security
A means test applies to all Chapter 7 bankruptcies, including for the elderly, pensioner and the retired. The test compares average monthly income to your state’s average. If you earn a lot, you may not be eligible for a Chapter 7.
Bankruptcy law does not allow benefits received under the Social Security Act to be included in the means test. This means that senior citizens are more favorably treated when filing for bankruptcy. If you are receiving an income as well as Social Security, you might still qualify for a Chapter 7 bankruptcy. You must still reveal your Social Security income in your bankruptcy submission.
Bankruptcy law can become overwhelming at times so it is always in your best interest to seek help from an experienced bankruptcy lawyer who will ensure your application is filed correctly.