While the financial crisis has hit the entire country very hard, Georgian Senior Citizens may be particularly affected due to the state’s increasing healthcare costs combined with its decreasing pensions – problems that typically affect the elderly population.

The good news is that Senior Citizens are eligible to take advantage of certain benefits that are not available to the middle-aged or young Georgians when filing for bankruptcy.  However, filing bankruptcy is not the right choice for everyone.  Read on to learn more about filing for bankruptcy as a Senior Citizen and contact our office to speak to an experienced attorney who can answer all of your questions about this process.

Bankruptcy May Help Reduce Your Healthcare Bills

Healthcare costs and medical bills are easily one of – if not the most – cited reason why Senior Citizens opt for filing bankruptcy.  The good news is that it is typically relatively easy to completely or mostly erase your medical debt through the bankruptcy process.  Usually, the best way to eliminate medical debt is to file for Chapter 7 bankruptcy.  However, not everyone can qualify for Chapter 7 which is another good reason why it is best to consult with an attorney before trying to take on this process yourself.

The reason why not everyone qualifies for Chapter 7 is because, to do so, the individual must pass something called a “means test.”  The means test basically determines whether the individual truly does not have access to a sufficient amount of monthly income in order to pay his/her monthly debt obligations.  If an individual’s monthly income is deemed to be too high, the individual is disqualified from filing for Chapter 7 (though other bankruptcy options may be available).  Basically, the means test tries to root out those individuals who technically have enough money to pay their debts but would prefer not to.

The good news for Senior Citizens in this regard is that Social Security benefits are not taken into account when calculating your income for the Chapter 7 means test.  (But these benefits must still be disclosed on your bankruptcy paperwork that is submitted to the court).

An important caveat to remember about Chapter 7 bankruptcy is that it only wipes away your medical debt that existed at the time you filed your bankruptcy application – and there are strict limits on how frequently someone can file for Chapter 7 bankruptcy.  Therefore, if you think you may incur a significant amount of medical debt in the near future (maybe because you have an upcoming scheduled procedure) you may want to wait to file your application until after your operation.  An experienced bankruptcy attorney will help you take these types of potential future consequences into account when creating your bankruptcy strategy.

Bankruptcy Will Not Affect Most Retirement Accounts

For many Senior Citizens, their retirement accounts are their nest eggs.  Federal law protects the vast majority of retirement accounts from the bankruptcy process (meaning the assets won’t be seized to pay off creditors), including 401(k) accounts, defined-benefits plans, 403(b) accounts, IRAs and Roth IRAs (though there is a ceiling limit on how much money may be protected in an IRA or Roth IRA).

What About My Home Equity?

In addition to their retirement accounts, many Senior Citizens view their home equity as part of their nest egg.  There are many, many rules governing how home equity is treated in the bankruptcy process.  If you do not take the proper steps to protect your equity, it could be taken and used to pay your creditors – a possibility that further highlights the recommendation to speak to an attorney before filing a bankruptcy application with the court.

To learn more about how bankruptcy may help you or a Senior Citizen loved one, contact our office today.  We look forward to speaking with you!