If you are facing unmanageable bills and debt, it may be tempting to cash out your retirement savings to pay that debt. Before you do, schedule an appointment with Levitt & Slafkes, P.C.. to discuss the other options you might have.
As a result of shrinking pensions and staggering medical bills, seniors are looking to bankruptcy relief in growing numbers. The numbers of seniors filing bankruptcy has increased steadily over the last decade, as they have realized the unique benefits of bankruptcy for seniors who have debt.
It is a common misconception that by filing bankruptcy, you lose your retirement accounts, your home, and all your assets. Nothing can be further from the truth. Qualified retirement accounts, including 401Ks, pensions, IRAs, and profit sharing are exempted from bankruptcy proceedings and cannot be seized to pay creditors. It is for this reason that if you are thinking of liquidating your retirement accounts to pay down debt, you should think twice.
Further, the bankruptcy code has special benefits for seniors in a Chapter 7 bankruptcy.In a Chapter 7 bankruptcy, a trustee liquidates certain assets and the court eliminates most of the common types of debt. A Chapter 7 bankruptcy is a quick and inexpensive way to eliminate credit card debt, unpaid medical bills and end creditor harassment which can be very stressful. However, only certain people qualify for Chapter 7 bankruptcy. Those wishing to file for Chapter 7 must pass a “means test.” This test looks to the borrower’s income and ability to repay existing debt. The good news for most seniors is that Social Security income is not counted in this test, helping more seniors qualify for Chapter 7 relief.
Even if you don’t qualify for Chapter 7, there are more options available. A Chapter 13 bankruptcy can help reorganize your debt by providing you with a payment plan based on your ability to pay and wiping clean credit card debt, medical bills, and many other eligible debts at the close of the payment plan. For seniors living on a fixed income, a Chapter 13 can help make their finances during retirement manageable once again.
If your household is burdened by debt, let the attorneys of Levitt & Slafkes, P.C.. help you explore your options. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Contact our law firm online or by calling 973-323-2953 to schedule a free initial consultation.