Recovering from Bankruptcy as a Senior
As we have previously reported on our blog, more seniors than ever are filing for bankruptcy. Of course, a bankruptcy filing does not spell doom and gloom. However, it takes persistence and a detailed strategy to dig your way out and rebuild credit.
An article in Barron’s recently tackled this issue. Below, we highlight some of the steps seniors should take as they move forward after filing for bankruptcy protection.
Understand Why Seniors Need Good Credit
Some people assume that seniors shouldn’t worry about filing for bankruptcy since credit is less of a concern for them. This couldn’t be farther from the truth. Though it might be a fact that seniors are less likely to take on a new mortgage in their golden years, credit still matters.
For example, seniors might need a loan to get medical care, or they could need a credit card to help them cover monthly bills. Because most seniors live on a fixed income, cash flow could be a problem, and a credit card can help.
After a bankruptcy filing, a senior’s credit score will definitely take a hit—usually more than 200 points, though the amount ultimately depends on your score before filing. Regardless, it is possible to rebuild credit and fairly quickly.
Make a Budget
Although saving money won’t directly improve a senior’s credit, it will give them peace of mind and allow them to avoid taking unnecessary loans. Barron’s recommends that seniors use apps like Mint to help them with budgeting and to tap any free or reduced-cost resources available to seniors. For example, some areas provide free meals to seniors, which can help with saving money. Many businesses also offer senior discounts.
Choose whether to Take Social Security Benefits
Some seniors might be faced with the choice of when to start drawing Social Security benefits. Currently, seniors become eligible for benefits at age 62, but they will get much more if they can wait until their full retirement age, which currently is 67. Even better, those who wait until age 70 to draw will get even more.
If a senior is not currently receiving benefits, they need to decide whether to wait or start drawing now. Proper budgeting can help a senior delay receiving Social Security, which can help them down the road.
Lean on Children, if Possible
No one likes to be a burden to their kids. At the same time, it might be possible to move in with your children for a year, until you get back on your feet. This would help many seniors enormously to save money.
If not, you could still benefit if you live near them. For example, you can split expenses by buying items in bulk with your children, or you can share a membership to Sam’s Club.
Use Credit Wisely
After filing, seniors can open a secured credit card. With regular monthly payments, they can soon begin building their credit score before graduating to an unsecured credit card. Typically, it can take a couple years of careful use of a secured card before lenders will extend offers for unsecured cards, but everyone’s situation is different. Always pay off balances so that you do not incur interest charges.
Bankruptcy in Your Golden Years? Contact Us
Nowack & Olson has helped thousands of consumers—including countless seniors—navigate the bankruptcy process. One of our Plantation bankruptcy lawyers is only one phone call away; reach out to us today at 888-813-4737.