4 Things Seniors Should Know About Declaring Bankruptcy After You Retire

You are sure of certain things in your working life: growing older and accumulating all your savings in the bank. Many seniors desire to reach their retirement age with enough savings in their accounts to sustain a comfortable life. 

However, that is not the case for those who retire with debts. Faced with increased healthcare costs, decreasing pensions, low income, and high tax rates, seniors have to rely on what they have in the bank and social security. 

When there is an imbalance in their savings and debts, they opt to file for bankruptcy. While the procedure helps relieve them of some cash straps, there are other concerns to consider.

Chapter

There are two key consumer bankruptcy protection types: Chapter 7 and Chapter 13. When you file bankruptcy with Chapter 7, you don’t have to deal with a debt repayment plan. 

Instead, all of your assets are liquidated and used to pay off as much of your debt as possible. If the value of your assets doesn’t cover the entirety of your debt, the remainder is dismissed. 

When you file bankruptcy with Chapter 13, you retain all your assets but commit yourself to repay your creditors a certain amount of money in a period of three to five years. The courts will decide on a payment plan for you.




When you file, you get to choose which type of bankruptcy to choose. However, there are some limitations to this. There is a means test to decide if you qualify for Chapter 7 bankruptcy. If your income is too great, you will be required to file for Chapter 13 instead.

Assets and Exemptions

Seniors should weigh the effect of declaring bankruptcy on their assets. All states have particular laws governing what is exempted during a bankruptcy case. 

Depending on where you reside, you can substitute federal exemption guidelines. Some of the assets that would likely be exempted in your case include a vehicle, home equity, clothing, and work-related equipment. 

Each exemption is associated with a certain amount of dollars. Homeowner retirees should pay attention to their state rules on homestead exemptions. Several states allow you to exempt a certain amount of money for your home value, while other states let you exempt any amount.

Retirement Income

As mentioned earlier, if you don’t qualify for Chapter 7 bankruptcy, you will have to file for Chapter 13 bankruptcy instead. However, one thing to keep in mind when doing the means test is that your social security compensation is not considered income, which can make it easier for seniors to qualify for Chapter 7. 

Additionally, pensions, 401k plans, annuities, and a certain part of a traditional or Roth IRA plan will all be exempted.

If you’re not sure whether bankruptcy is right for you or which type of bankruptcy you should file for, talk to a bankruptcy attorney. They can give you advice about what would best fit your specific situation. They can also help you in filing and working with the courts.

Filing for bankruptcy in your retirement is beneficial if you have substantial debt and do not have enough income to cover it. Contact a bankruptcy attorney for more information. The attorney will explain the legal process of filing for retirement bankruptcy and how to avoid penalties.

Is there a difference between Chapter 7 and Chapter 13 Bankruptcy?

Declaring bankruptcy is an upsetting time for anyone. You never want to be placed in this position. In the US, there are two major types of bankruptcy you might file for if your personal debts have grown out of control: chapter 7 and chapter 13 bankruptcy. A lot of people confuse these two types, and when you are facing serious financial debt, it can be very difficult to know which route to take.

Here are the major differences between chapter 7 and chapter 13 bankruptcies, so you’re aware of your options if you face insurmountable debt.

Chapter 7 Bankruptcy Explained

Chapter 7 bankruptcy is where you admit to the court you have no chance of paying off your debts, and the court discharges your debts. You’ll be completely free from debt, but the catch is your belongings and property can be distributed to creditors to pay off your debts. There are items exempt from this, but in extreme situations where you owe large amounts of money, you could lose everything.

This is the end of the line for most people. The bankruptcy mark will remain on your record for a number of years, making it almost nearly impossible to take out credit.

Chapter 13 Bankruptcy Explained

Chapter 13 bankruptcy isn’t bankruptcy in the conventional sense. While you agree you can’t pay off your debts, you don’t necessarily discharge the debts. Instead, you broker a deal in the courts between you and your creditors where you’ll create a repayment plan. Usually, you’ll have your wages garnished every month until the debt is repaid. The difference is you aren’t putting your belongings at risk unless you specify that in the terms of repayment. In some cases, you might have some of your debt discharged.

Like chapter 7 bankruptcy, the mark of a chapter 13 bankruptcy remains on your credit score for several years, making it difficult to take out new lines of credit.

What Can They Take?

In chapter 13 bankruptcy they can’t take a thing. This isn’t where you admit you have to make a fresh start. It’s simply admitting you need legal intervention to help you pay off your debts. You can agree to sell something, like a car or furniture, to make the deal better for yourself, but it isn’t always necessary.

In the case of a chapter 7 bankruptcy, they can take anything of sufficient value. A bank could seize property, but in many states your primary residence is protected. Despite the equity, it’s likely the bankruptcy could still force a sale of your home so the creditors can recover their money.

You can lose your vehicle unless the court deems it essential to your livelihood. You can also keep trade tools for your work, but this only applies to a certain value. Anything above this value can be sold.

Your furniture and personal belongings are normally exempt from being sold off to collect a debt. Expensive jewelry and large items like plasma televisions and high-tech computers can be sold if they’re worth enough.

If you’re filing for either type of bankruptcy, it’s strongly recommended you employ a bankruptcy lawyer to help with the process. Through professional legal guidance, you can get you a more favorable deal and potentially help you retain many of your possessions.

About the Author:Ashley Parker has worked with many bankruptcy lawyers and financial advisors over the years. She regularly educates people on the differences between chapter 7 and 13 bankruptcies. As one of many chapter 7 attorneys, she recommends her clients try to opt for chapter 13, if at all possible.

When To File For Bankruptcy - Seven Tips

Bankruptcy is a last resort for many people. Debt is sometimes quite difficult to get out of, and no amount of saving or investment is going to help you in this regard. If you are considering filing for bankruptcy, however, it is important to consider a few things.

Bankruptcy is a legal status that you will take when you cannot pay debts to your creditors. A lot of the time, bankruptcy is usually going to be imposed on an individual via a court order. Some people may see that it is best for them to take bankruptcy on their own in order to avoid having to pay off the large debts that they have acquired.

Your Credit Rating

Your filing for bankruptcy is something that is going to remain on your credit rating for at least ten years. This is why it is important to consider everything when you decide to file for bankruptcy. You need to have a bankruptcy attorney in Gilbert to guide you down the right path.

If you are looking to buy a property within the next ten years, then this is going to end up being very difficult no matter how much money you have.

Creditors' Legal Rights

Bankruptcy does not mean that you can completely avoid your debts. It means that you can only make them wait for you to pay back your debts over time. Essentially, this is a way of buying you time.

Your Co-Signer

The co-signer to any loans that you have taken out is still going to be held responsible for anything that you cannot pay back. This is something that bankruptcy is not going to cover, so remember this.

Debt Collection

If you can go for bankruptcy, then you will be able to stop debt collection harassment. This is often one of the many reasons why many people will seriously consider taking this particular path.

Types

There are different types of bankruptcy that you can choose. If you want to find out more about them, then you are going to have to speak with your lawyer. He or she will be able to run you through the details so that you can make an informed choice when it comes to your financial decisions.

Discrimination

According to the law, you cannot be discriminated against by employers or other institutions just because you are bankrupt. This means that you will have legal protection and be able to get other work.

Cost

There are going to be costs involved when it comes to declaring yourself bankrupt. Each case is going to have a different cost attached to it, though most of the time these are going to be the same. The fees usually fall between $150 and $200.

Make sure to keep all of these points in mind before you decide to take that step. This will ensure that you can make a proper, informed decision.

Author Bio: Ashley is a professional writer. She is interested in writing finance, Money saving related articles.This is one such article which explains on how You can Avoid bankruptcy with Debt Management Counseling & Learn to control your finances by Credit card debt management programs.