Special Issues in an Illinois Grey Bankruptcy

The overall bankruptcy filing rate has declined over the last several decades. But the over-65 filing rate has increased 600 percent since 1991.

Relaxed consumer credit standards as well as a shrinking social safety net are largely responsible for the increase. The average over-65 individual has several credit cards which each have very high credit limits. And, Medicare usually covers 80 percent of most medical bills. 20 percent of a cancer treatment bill is an awful lot of money.

Younger people can usually pay off large debts over time. But that’s not an option for older individuals. When these individuals file bankruptcy, a Chicago bankruptcy lawyer must be mindful of some issues which are unique to grey bankruptcies.

Retirement Accounts

This section will be rather short. The Supreme Court recently reaffirmed that earned 401(k)s, IRAs, and other retirement nest egg accounts are 100 percent exempt in bankruptcy, regardless of their value. That’s a significant advantage for over-65 filers. Retirement accounts are a tempting target for moneylenders. And, they usually only need a court order to tap them.

In addition to their financial value, retirement accounts usually have a significant emotional value. They represent a reward for a lifetime of sacrifice and savings. So, it’s very important for these individuals to retain these accounts. Bankruptcy is often the only way to ensure that outcome.

Social Security Benefits

A majority of Social Security recipients depend on these payments for most or all of their income. Losing it would be financially devastating.

For bankruptcy purposes, Social Security and other government benefits are assets as opposed to income. As a result, like most other assets, these benefits are exempt.

That being said, debtors can take some steps to protect their Social Security benefits. It is usually a good idea to keep this money in a separate account, so it does not mix with wage income, interest income, and so on. Always speak to an attorney before you move any money.

Home Equity

Typically, folks over 65 have lived in their home for at least fifteen years. As a result, they often have a significant amount of home equity.

Married Illinois debtors can exempt up to $30,000 in home equity. Proper home valuation is usually the key to maximizing this exemption. A house’s quick sale value might only be a fraction of its fair market value. The lower value makes it impossible for the trustee (person who oversees the bankruptcy for the judge) to sell the home and pay off the protected equity amount.

Count on Dedicated Lawyers

Bankruptcy offers a way put for people over 65 who are experiencing financial distress. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. We routinely handle matters in Illinois and Indiana.

Resource:

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https://bentzholguinlaw.com/breaking-down-a-chapter-13-bankruptcy-in-indiana/