You’ve worked hard your entire life, dreaming of the retirement you deserve. Playing golf, traveling the world or sitting beachside with a cocktail. all images that fit nicely into your plan. Of course, things don’t always go as planned and retirees can wind up facing financial challenges that threaten to destroy their long-held dreams.
Bankruptcy might not seem like an ideal move for people of retirement age. After all, the last thing you want as a retiree is to feel “wiped out.” But, filing for bankruptcy is one way that retirees can guard their assets from creditors. In fact, those of retirement age are in a unique position and can receive a number of exemptions:
- When filing for Chapter 7 bankruptcy, courts will look at the past six months of income. Thankfully, many retirees receive Social Security income and that is completely exempt from consideration in bankruptcy proceedings.
- Life insurance policies can be exempt when they are directed toward a child or a spouse.
- IRAs, public retirement pensions and 401(k) plans are also protected in a bankruptcy.
- It can be particularly useful if you’ve got a second or third mortgage. The debt may be eligible to be completely erased if the property is now worth less than what you owe on the first mortgage.
Filing for bankruptcy is a big step and not one to be taken lightly. However, if you do decide to file, a bankruptcy attorney may be able to walk you through the process and help you find exemptions that you didn’t know you could take.