Am I Too Old To File Bankruptcy?

No. Bankruptcy has a residency requirement. In most cases, a legal status requirement applies as well. But there is no age requirement. Once upon a time, it was rare for people over 65 to file bankruptcy. But the filing rate in this age bracket has increased significantly since the 1990s, even as the overall bankruptcy filing rate has declined. Procedurally, a so-called grey bankruptcy is the same as a standard bankruptcy. However, as outlined below, these matters often involve some special issues.

The benefits of bankruptcy are the same for everyone as well. High medical bills force most older people into bankruptcy. The Automatic Stay halts creditor harassment and puts you back in control over your own finances. Additionally, a Chicago bankruptcy lawyer can help you maximize the benefits of bankruptcy.

Social Security Benefits

Theoretically, these benefits are exempt assets. Protecting them from a practical standpoint is often a different matter.

In fact, most government benefits are exempt assets, even if they come in the form of monthly checks. Even better, the Social Security Administration also classifies benefits as exempt assets. So, even if the trustee (person who oversees the case for the judge) tries to force you to return Social Security benefits, the SSA will not accept them.

Most other assets are exempt as well. That includes your house and retirement account. More on that below.

However, this protection is often only theoretical. Most people keep exempt Social Security benefits in the same bank account with nonexempt wages. Once this money gets commingled, it’s hard to separate it. Therefore, most lawyers suggest that these individuals keep these funds in separate accounts.

Always speak with a Chicago bankruptcy lawyer before you move money prior to filing bankruptcy. The trustee might claim that these transactions are fraudulent.

Retirement Account

In many households, an IRA, 401(k), or other retirement nest egg is the family’s largest financial asset. These accounts also have a substantial emotional value. A retirement account represents reward for a lifetime of financial sacrifice, as well as future security.

Many asset exemptions have dollar limits. For example, the law exempts a certain amount of home equity. But the Supreme Court recently confirmed that retirement accounts are 100 percent exempt, regardless of their amount.

The same commingling problems discussed above could apply here. Retirement account disbursements should be kept apart from wage income.

Home Equity

Indiana homeowners may shield up to $19,300 of home equity. So, if you have less equity than that, the trustee cannot touch your house. This ceiling might be a problem if you have paid off more than half the home loan.

Proper home valuation often comes into play. A home’s fair market value is not the same as its as-is cash value. Initially, most “we buy ugly houses” home investors only offer pennies on the dollar. Frequently, that offer is below the $19,300 threshold, especially if the home needs work.

Contact Hard-Working Cook County Lawyers

When older people file bankruptcy, some special issues are involved. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. After-hours visits are available.

Resource:

usnews.com/news/data-mine/articles/2018-08-08/bankruptcy-soars-among-elderly-as-inequality-deepens