What do I need to know if I am considering filing for bankruptcy while in retirement?
With the rocky American economy, an increasing number of seniors are reaching retirement age without enough savings to maintain a comfortable standard of living. Burdened by debt and without a substantial income, seniors in Ohio and elsewhere across the nation may find themselves considering filing for bankruptcy. Our Miami Valley bankruptcy lawyers discuss some facts you should know if you are a retiree who will potentially turn to bankruptcy.
Chapter 7 vs Chapter 13 for Retirees
You will need to determine which of the types of bankruptcy will best suit your needs while retired. With a Chapter 7 bankruptcy, you can eliminate all of your debt, but those with sizable assets could be forced to turn these assets over to the bankruptcy court prior to discharge. Chapter 13 bankruptcy will allow you to keep your home, car, and other assets, but you will need to commit to paying back an agreed amount portion of your debt over a three-to-five-year period.
Do You Qualify for Bankruptcy?
In order to be eligible to file for Chapter 7 bankruptcy, you will need to pass a means test. This test will compare your median family income to the median income for a family of your size in your area. The good news for retirees is that Social Security benefits are not considered income. For many seniors, this will allow them to take advantage of the incredible debt relief power of Chapter 7. Retirees that do not qualify for Chapter 7 bankruptcy can likely pursue a Chapter 13 case.
Retirement Assets and Bankruptcy
Retirees will need to carefully consider how bankruptcy could affect their assets. Ohio has its own laws on bankruptcy exemptions. Your attorney will help you to determine whether your home will be protected under the homestead exemption. Fortunately for most seniors, your retirement accounts will generally be protected from bankruptcy seizure under federal law.
Filing for bankruptcy in retirement can be stressful, but for retirees with substantial debt and insufficient disposable income to cover their expenses, bankruptcy can be a life saver. Contact a bankruptcy attorney for experienced assistance with your potential bankruptcy case.