If you find yourself in some financial straits, one of the ways you can help yourself is by filing for bankruptcy. Different kinds of bankruptcy can help you in different ways, but they all provide you a break from paying off your debts so you can hopefully recuperate financially.
If you want to learn more about bankruptcy, consult an attorney who specializes in bankruptcy law, like https://www.thebklawyers.com/attorneys/ to learn more.
Even though bankruptcy doesn’t have an age restriction, most people filing for bankruptcy are working age people, whereas seniors are a bit less represented. However, there are specifics of a bankruptcy case which may pertain specifically to senior citizens.
Why Senior Citizens Rarely File for Bankruptcy
Current senior citizens seem to be largely well-off. Working in a stable economy has helped them accumulate some wealth which should help them live comfortably during their retirements.
Even though this still holds true, gradually, the economy is changing, and the living conditions are changing with it. The pensions of many seniors are becoming smaller, while the costs of living are getting bigger.
From a financial point of view, the seniors are getting worse-off, but they can largely absorb the decreased wealth by changing their habits to some extent.
However, there is one aspect of life which can be very unpredictable and can rake up some serious debt, and that is medical bills. And that is not true for seniors. Every age group can be affected with very high medical bills which they cannot pay off.
In fact, it is one of the most common causes of bankruptcy in general. On the other hand, seniors are often more prone to various illnesses and in more need of medical attention, which makes medical debt a particular point of contention for seniors.
How Medical Bills Are Treated in Bankruptcy Cases
Fortunately for all those who struggle with medical bills, this kind of debt is grouped together with all other unsecured debt and it is actually really easy to write off.
However, there is a caveat there where a lot of people make a mistake. Bankruptcy can only help you with the debt you have already accrued, and it won’t include any future debt. That means that it is better to wait until the medical treatment is completed and then file to ensure that all debt can be cleaned.
What about the Pension Plans
A lot of senior citizens rely on their pension plans to support themselves in their old age. The government is well aware of it, which is why the majority of pension plans are exempt from the bankruptcy process.
This exemption includes the 4019(k), 409(b), IRA, and Roth IRA pension plans. However, savings accounts which are not specifically listed as pension plans won’t be spared.
Bankruptcy Means Testing
As mentioned previously, bankruptcy is the right of every citizen and it doesn’t discriminate according to the age of the filer.
However, in order to qualify for it, you still need to pass a bankruptcy means test. In essence, it is a simple calculation whether you can pay off your debts and still support yourself with the income you have.
Chances are that you can’t if you are looking for bankruptcy, but this is a failsafe mechanism to prevent the abuse of this important protection measure.
Problems Seniors Face with Bankruptcy
The main problem with seniors and bankruptcy is not the availability of it; it’s more a matter of people not knowing the full extent of their rights.
The information about bankruptcy is readily available on the internet and with bankruptcy attorneys, but senior citizens can be technologically less savvy and that limits their ability to realize their rights.
Filing for bankruptcy can be a fairly simple and straightforward process, if an unpleasant one, if you have a good attorney on your case. Doing a bit of research about an attorney can save you a lot of trouble and money, as well as determine the outcome of your bankruptcy case.