Older Americans are in more debt than ever before. According to a 2019 Congressional Research Service report, the percentage of elderly debt increased from 38% in 1989 to 61% in 2016. This is not a reflection of poor life choices. The safety net for seniors continues to shrink, while living expenses soar. Furthermore, unexpected life events — like a pandemic or the loss of a spouse — can shatter life savings.
As a Memphis bankruptcy lawyer, I think anyone who has spent their life working hard deserves to enjoy a peaceful and comfortable retirement. If you are of retirement age and are struggling with debt, I want you to know that it’s never too late for a fresh start. Bankruptcy can offer you the financial relief you deserve.
That being said, I know there are quite a few misconceptions about retirement and bankruptcy. Below are some answers to common retirement-related bankruptcy questions clients often ask me.
Retirement and Bankruptcy FAQ
1) Does bankruptcy affect my retirement funds?
Retirement accounts exempt from taxes are also exempt from bankruptcy, up to more than $1 million. Including:
- IRAs and Roth IRAs
- Pension plans
- Profit-sharing plans
- Employee annuities
- Stock bonus plans
- Money purchase plans
A Chapter 7 bankruptcy fully protects your retirement funds. In a Chapter 13 bankruptcy, the balance in your retirement accounts is safe and won’t affect the amount you owe in your repayment plan.
2) Can creditors go after my Social Security?
Under federal law, most creditors can’t garnish your Social Security benefits or disability income. However, once the money hits your bank account, it can be taken by creditors. This is a big reason to consider bankruptcy when you’re retired: if you clear your debt, you won’t have to worry about that money being taken.
3) Can I wipe out medical debts through bankruptcy?
Yes. In fact, this is one of the biggest reasons many older Americans file. A Chapter 7 bankruptcy totally eliminates your medical bills and any healthcare-related debt.
4) Is there an age limit to file for bankruptcy?
You can file for bankruptcy at any age, and senior citizens file all the time. It’s actually more common for older Americans to file than you may think. Recent studies have found that, since 1991, the number of Americans 65 and older who’ve filed bankruptcy has tripled. The financial freedom bankruptcy offers is truly for everyone.
Contact one of our Memphis bankruptcy lawyers for a FREE consultation.
Many seniors feel that if they file for bankruptcy later in life, it means they failed. In truth, it can be one of the smartest choices you make for a better financial future.
If you’re worried about your retirement savings and are struggling with debt, contact us online or call 901-327-2100 for a FREE, no-strings-attached consultation. We will answer any questions you have, and come up with a plan that meets your specific needs. Don’t wait; call us today to get on track for a bright, worry-free retirement.