Some older residents of Florida may find that the burden of their debt load has become overwhelming. Such circumstances may result from medical expenses, financial aid provided for needy children and, in some cases, even study loans. Unfortunately, many seniors are embarrassed by their situations, and they delay taking action to remedy their financial quandary. In an effort to overcome the predicament, some drain their retirement accounts, leaving them destitute in their retirement. Some will not even consider Chapter 7 bankruptcy because of the negative connotations afforded to it.
Negotiating with credit card companies and even medical creditors may provide some relief, but it may only prolong the dire situation. Chapter 7 bankruptcy is also known as liquidation bankruptcy, because it involves the liquidation of some assets. But, it will also discharge most unsecured debts, such as credit card debts and medical debts. There are ways by which retirees can avoid having to give up their homes, by taking advantage of the homestead exemption allowed under state law to keep their estates intact.
Some assets can be protected in bankruptcy. Under federal law, retirement savings and income can commonly not be jeopardized in bankruptcy. Qualified profit sharing plans, 401(k)s, and pension plans, along with individual retirement accounts of specific values and Social Security, are not accessible to creditors. There are, however, some debts that will not be discharged, including recent federal tax bills and student loans, along with child and spousal support.
Retirees in Florida may benefit greatly from consultations with experienced bankruptcy attorneys. This will provide the opportunity to have all their questions answered, and the advantages, disadvantages and requirements of the different bankruptcy chapters explained. The unique circumstances of each person will determine whether he or she will qualify for Chapter 7 bankruptcy or for Chapter 13, which offers extended repayment options rather than liquidation. The significant protection provided by personal bankruptcy makes it a viable option for seniors to become debt-free without draining their retirement funds.
Source: elpasoinc.com, “Bankruptcy can help seniors protect assets“, Constance Gustke, June 1, 2015