Filing for Bankruptcy as a Senior Citizen
It is an unfortunate truth that many Senior Citizens in Georgia have been hit particularly hard by the recent economic recession. Senior Citizens are often living on a very small and fixed income, with little to no opportunities for making extra money when times get tough.
Another unfortunate fact is that most Senior Citizens incur large amounts of debt in the form of medical bills. Many people think there is nothing they can do in order to alleviate their debt. But, depending on your personal circumstances, filing for bankruptcy may be the right decision for you and your family. Read on to learn more about filing for bankruptcy as a Senior Citizen.
Can I Use Bankruptcy to Get Rid of My Medical Bills?
The answer is yes, filing for a Chapter 7 bankruptcy will allow you to discharge your medical bills – but only your bills that have accrued as of the day that you filed for bankruptcy. This date is called the petition date and it controls many important aspects of the bankruptcy process. The petition date plays a key part in developing a proper bankruptcy strategy, which is why it is often a good idea to work with a bankruptcy attorney before filing the case.
For example, let’s say you have $5,000 in medical debt and you have another procedure scheduled in two months that will cost another $10,000 to perform. It would likely be a good idea for you to wait to file your bankruptcy case until after the second procedure because then you can include that debt in your petition. If you file for bankruptcy before the second procedure, that $10,000 will not be discharge because it will be a debt incurred after the petition date.
Can I Keep My Retirement Accounts?
It is a common misconception that people “lose everything” when they file for bankruptcy. While it is possible that a bankruptcy trustee may sell a person’s house or their other assets, there are multiple kinds of assets that are exempt from the bankruptcy process – which means they will not be sold in order to pay off creditors. One very important category of exempt assets is legitimate retirement accounts. All funds saved in defined-benefit plans, profit-sharing, 401(k)s, 403(b)s, and money-purchase accounts are exempt from bankruptcy. Funds saved in Individual Retirement Accounts (IRAs) and Roth IRAs are exempt for up to $1,245,475 (though this exemption amount may change every three years).
Can I Keep My Home in a Bankruptcy?
If a Senior Citizen owns a home, it is of the utmost importance that he/she contact a bankruptcy attorney before filing the bankruptcy. The reason for this advice is because the person could lose the home if there is a certain amount of equity in it. There are many protections for home owners in the bankruptcy process, such as homestead exemptions, but these rules are very complicated, state-specific, and require an experienced attorney for assistance.
I Have Some Social Security Income – Does that Matter?
In order to qualify for Chapter 7 bankruptcy, the Senior Citizen (just like everyone else) must pass the Means Test. The purpose of the Means Test is to confirm that the person truly does not make enough money to pay his/her bills. The good news for Seniors is that their Social Security benefits are not counted as income for the purposes of the Means Test, which allows many people to qualify for Chapter 7 when ordinarily they may not.
As you can see, filing for bankruptcy as a Senior Citizen has multiple benefits and disadvantages. To determine if this course of action is best suited for your case, contact our office today to speak to an experienced bankruptcy attorney about your situation. Call 404-913-1529 today.