A lot of senior citizens are finding themselves in a place that they simply never expected to be at their age: bankruptcy court.
Some seniors simply weren’t able to earn enough money over the years to pay off their debts and put money away for their retirement. When they do retire, those debts weigh on them and make life very difficult. In other cases, a single serious illness with all the attendant medical debts will wipe out a savings and force a senior into bankruptcy despite their earlier good fortune.
If you’re a senior whose debts have become an impossible burden, here’s what you should know about bankruptcy:
1. It’s the best way to protect your Social Security benefits.
Creditors aren’t supposed to be able to seize your Social Security retirement for your debts, but many have found that the bank accounts of seniors with debts are vulnerable to legal action. Filing bankruptcy can firm up your legal protections and keep creditors from severing your financial lifeline.
2. Other retirement plans are generally safe.
Money that you’ve saved in a 401K, IRA or other savings fund for your retirement are generally inaccessible to creditors when you file bankruptcy. While there are a few exceptions, the vast majority of seniors shouldn’t have to worry about losing what little they have put away for their retirement.
3. You may not even need to file.
While it may be emotionally hard to do, you may able to simply walk away from medical debt and creditors, because you don’t have anything they can collect. While every situation is unique (and it’s definitely not a decision you should make without getting professional advice about your bankruptcy options), if your only income is your Social Security or pension and you have few assets, you may not even need to file.
On the other hand, filing bankruptcy can certainly make it easier to cope with your financial situation, especially if you’re bothered by creditors.
