The belief that debt is a “young person’s problem” is a myth. Across the country, thousands of senior citizens are facing large debt loads due to a variety of reasons, such as excessive medical costs, decreasing pensions, investment losses, and in some cases, misappropriation by fraudsters who prey on elderly victims, and the list goes on.
If you are a senior citizen who is concerned about substantial and unsustainable debt, then here are some key facts that you need to know about potentially filing for chapter 7 bankruptcy:
- Filing for chapter 7 bankruptcy will wipe out most of your debts, including your medical debt (provided that it is not incurred after you file).
- Just as with petitioners in other age group, the moment you file for chapter 7 bankruptcy all creditor collection action must cease. This includes all aggressive phone calls.
- Most tax exempt retirement accounts — such as 401(k)s, 403(b)s, defined-benefit plans, profit-sharing, and money purchase accounts — are 100 percent protected by Federal bankruptcy law, and therefore cannot be liquidated by the court-appointed Bankruptcy Trustee to pay creditors. IRA and Roth IRA accounts are protected up to $1,283,025 (this is scheduled to increase on April 1, 2019). Keep in mind, however, that funds that are not in legitimate retirement accounts or investment vehicles are not protected.
- Understandably, you may be very worried about losing your home after filing for bankruptcy, especially since it is likely the largest portion of their retirement nest egg. There is some good news and potentially bad news about this. The good news is that Federal law allows you to take advantage of a homestead exemption, which protects a portion of the equity in your home. The potentially bad news is that some states have a higher allowance than others. It is very important to contact a bankruptcy attorney in your state to get all of the information, including all of the rules governing this homestead exemption.
- All chapter 7 petitioners (regardless of age) must pass a “means test” to confirm that their income is below their respective state’s average threshold. However, contrary to what some people are led to believe, any income that you receive per the Social Security Act are NOT counted as income for the purposes of the means test. This means if you largely or exclusively on Social Security benefits, then it is virtually a foregone conclusion that you will pass the means test in your state.
If you are facing significant and unsustainable debt, then you are invited to contact the Law Office of Charles H. Huber today. We will provide you with a considerate and confidential consultation, during which you can ask important questions, and get the facts you need and deserve to make a safe, informed decision about your financial road ahead.