Am I Too Old To File Bankruptcy?

As a whole, the number of consumer bankruptcy filings has fallen sharply since the law changed in 2005. But a combination of disappearing pensions, escalating healthcare costs, and student loan debt, either for themselves, their children, or grandchildren, has caused the over-65 filing rate to increase significantly. “Grey bankruptcy” was almost unheard of as late as the 1990s. Today, one in seven filers are in this age group.

The factors which drive older adults into bankruptcy are largely, or entirely, beyond their control. This feeling is perhaps worse than the underlying financial problems, especially for older adults who have worked their entire lives. A Chicago bankruptcy attorney helps consumers of all ages regain control of their own financial situations.

Benefits of Bankruptcy

Financial triggers, like a creditor lawsuit, prompt most older adults to file bankruptcy. Unpaid medical bills commonly, and quickly, lead to lawsuits. Many doctors turn unpaid accounts over to aggressive debt buyers after only two or three months. Furthermore, if a beneficiary has unpaid student loans, the Social Security Administration can garnish up to 15 percent of a Social Security check.

Section 362 of the Bankruptcy Code, which is also known as the Automatic Stay, immediately stops these adverse creditor actions, whether the creditor is a private company or government entity. This provision also stops repossession, foreclosure, eviction, and most other adverse actions. In most cases, Section 362 of the Bankruptcy Code takes effect immediately upon filing.

Additionally, bankruptcy protects your property. Illinois law usually shields your key assets, such as:

• House,
• Retirement account,
• Car,
• Social Security benefits, and
• Personal property.

Furthermore, bankruptcy eliminates most unsecured debts, such as medical bills. Debtors also have the option to repay these debts at their own pace or through an income-based debt consolidation plan.

Some Special Grey Bankruptcy Issues

We mentioned some key property protections above. These protections have a special meaning for debtors over 65. There are some special issues to consider as well.

Many people in this age bracket have lived in their homes for more than twenty years. As a result, they usually have substantial equity in their properties. In many cases, this equity amount could exceed the Illinois home equity ceiling.

However, there’s usually a significant difference between a home’s fair market value, which is usually available on the tax appraiser’s website, and a home’s as-is cash value, which must be listed on Schedule A. Most home investors will only pay pennies on the dollar for an as-is cash sale, especially if the house needs any work. The lower bankruptcy value protects additional home equity.

Social Security benefits are usually an issue as well. A substantial number of families depend almost entirely on these payments to make ends meet.

The Bankruptcy Code is quite clear that these payments are exempt assets, even if they come in the form of monthly checks. To fully protect these benefits, we usually suggest that debtors separate government benefits from other income.

Always speak with an experienced Chicago bankruptcy attorney before declaring the value of your home or moving money into a separate account. The trustee (person who oversees the bankruptcy for the judge) could bring bankruptcy fraud charges against the debtor in these situations.

Rely on Dedicated Cook County Lawyers

The financial storms of life, such as serious illness, could affect anyone at any age. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.

Resource:

ft.com/content/a180501e-b8a3-11e9-8a88-aa6628ac896c