Increasing costs of health care and falling pensions are causing more senior citizens in Texas to seek bankruptcy relief. When filing for bankruptcy, older adults may enjoy specific advantages. But for seniors who possess a great deal of non-exempt property, bankruptcy may not be the appropriate choice.
Your Medical Bills Can Be Eliminated by Filing for Bankruptcy
Medical debt is among the top reasons for bankruptcy for elderly citizens. Fortunately, this type of debt is the easiest to discharge during bankruptcy, particularly when filing a Chapter 7 bankruptcy. Nevertheless, remember that only the debts that exist at the time you file are included in the bankruptcy. If you will incur more medical debt, consider waiting to file until all medical bills can be included.
To find out more, see Should I Delay My Insolvency to Contain All Medical Bills?
Shielding Your Home Equity from Bankruptcy
For most senior citizens, their house is their retirement nest egg. If you’ve got equity in your home, you should make sure it will not be in danger when you file for bankruptcy. Luckily, the national bankruptcy exemptions, together with many states, offer debtors a homestead exemption to protect a specific amount of equity in their home. However, not all of your home equity is covered. It’s important to discuss this with your Texas bankruptcy lawyer before filing.
Retirement Accounts and Bankruptcy
In addition with their home equity, many seniors have a significant sum of money saved within their retirement accounts. Under federal bankruptcy law, virtually all valid tax exempt retirement accounts, including 401(k)s, 403(b)s, profit sharing, etc. are totally exempt in bankruptcy. What this means is that in many cases, your retirement funds are not in danger in Chapter 7 bankruptcy.
Nevertheless, remember that bankruptcy law just protects retirement funds that are in a valid account. If your cash is in a savings account rather than a retirement account, it may not be protected during bankruptcy.
Social Security Benefits Aren’t Counted in the Means Test
Like most individuals, senior citizens must pass the bankruptcy means test in order to file a Chapter 7 bankruptcy. The means test compares your typical monthly income to your financial obligations to discover if you’re able to declare Chapter 7 bankruptcy. You may not be qualified for a Chapter 7 if your income is excessive. However, this law favors seniors over other debtors in bankruptcy and social security benefits don’t count as income when taking the means test.
Find out more about filing for bankruptcy as a senior citizen by calling the Law Firm of D.C. Higginbotham at (904) 354-6604.