Recently, the New York Times had an interesting story about how seniors entering into retirement were utilizing bankruptcy to protect their assets.
The piece focused on a retired Florida nursery owner, 66, who was being harassed by creditors, so he filed for Chapter 7 bankruptcy. “I wanted to leave money, not debt, to my grandchildren,” the man said, according to the Times, “and begin rebuilding my life.”
The attorneys he worked with told the man that bankruptcy would be an excellent tool for protecting his retirement assets. As the news outlet reported, retirement income plans including pensions, 401(k)’s and profit-sharing plans are mostly exempt from creditors, as are individual retirement accounts worth up to $1.245 million. Additionally, Social Security payments, for the most part, are exempt from liquidation.
In addition to keeping these retirement assets, in many cases, seniors are able to save their homes through homestead exemptions during bankruptcy proceedings. Keep in mind, through a Chapter 7 bankruptcy filing, an individual can discharge certain debts like credit lines and medical bills. However, some debts like student loans and federal taxes that are less than three years old can be difficult to discharge. If you have these debts, it may prove useful to speak to an attorney about the best way to proceed.
In order to file Chapter 7 bankruptcy, a person must be able to pass a means test based on his or her income. For seniors, this is often an easy task, as they may not be earning an income at the same level they were during their working careers.
How Can a Lawyer Help Me Prepare for Bankruptcy?
Our Lewisville bankruptcy lawyers often work with seniors who are looking to escape overwhelming debt, while keeping their retirement assets. In order to successfully file for bankruptcy and maintain these assets, it is important to seek skilled legal advice—the failure to do so could result in your case being thrown out of court or debts being restored.
Remember, a bankruptcy filing generates an automatic stay, which halts collection attempts—if creditors are harassing you, this can be incredibly beneficial.
Shuster Law Firm PLLC – Lewisville Bankruptcy Attorneys