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Should Retirees Declare Bankruptcy?


Retirement is supposed to be a time when you can walk away from the rat race and stop worrying about money.  Federal programs such as Social Security and Medicare are designed to protect seniors from poverty.  In practice, though, the law gives companies a lot of leeway to impose heavy financial burdens on consumers; it also gives creditors a fair chance, to say the least, to seek repayment of debts owed to them.  All of this means that many retirees face the same creditor harassment that has become the new normal for people of working age.  The difference is that seniors have little or no employment income left to earn.  On the surface, filing for bankruptcy protection seems like an ideal solution when you have a limited income with which to pay off debts that keep accruing interest.  The specifics of bankruptcy law differ depending on your age, though.  If you are beyond middle age but still struggling with debts, contact a Plantation chapter 7 bankruptcy lawyer.

Debt Doesn’t Stop Just Because You Have Turned 65

Advertisements for debt relief services and financial products geared toward people with low credit scores seem to assume implicitly that the average debtor is a divorced father or mother between the ages of 30 and 50.  While this demographic certainly bears a large share of America’s consumer debt burden, debt has come to affect almost everyone by 2023, including seniors.  It is true that your expenses decrease once you retire, but old debts can still follow you around.  Medicare helps reduce medical expenses, but it doesn’t pay for everything, and you might still have medical debts following you around from before you retired.  Likewise, Parent PLUS loans tend to follow empty nesters into retirement, and the balances on these loans can be astoundingly high.  Seniors who experienced financial hardship in middle age might still owe overdue child support, even though their children have reached an age where they have already voted in more than one election.

Bankruptcy Laws and Retirement Income

The short answer is that, yes, seniors can file for bankruptcy; federal bankruptcy laws extend this right to everyone, regardless of age.  The better question is whether a bankruptcy filing will improve your financial situation.  Bankruptcy can quickly make medical debts and credit card debts disappear, but it cannot discharge alimony, child support, and federal student loan debt.

Furthermore, some types of income are safe from creditor collections whether or not you file for bankruptcy.  Creditors cannot take your retirement income while it is saved in a retirement account, and they cannot take your Social Security income unless you deposit it in a bank account that also includes money from other sources.  Another age-specific factor related to bankruptcy filings is that your home equity can cause you to get less debt relief from your bankruptcy case than a younger applicant with less home equity would get.

Work With a Debt Lawyer About Difficult Financial Decisions

A South Florida debt lawyer can help you make wise decisions about debt relief at any age.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.




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