Bankruptcy and Your Retirement
Due to the economy, many older people who have reached retirement age are struggling financially each month. Some of the sources of their problems are credit card debt, high medical expenses, and living on a fixed income. A study by the University of Michigan shows that more people over the age of 65 are filing for bankruptcy protection from their creditors during retirement. Here are some facts you need to know about bankruptcy and your retirement.
Limited Credit Options
After retirement, many people find themselves having a hard time trying to find new sources of credit because they are living on a fixed income. After you have filed for bankruptcy, your chances of finding credit sources will be harder than before. You should take the steps to find additional sources of income, especially if you were using credit to pay for necessities before filing for bankruptcy.
To reestablish your credit after bankruptcy, you should try to apply for a secured credit card. A secured credit card will provide you with the same benefits as a regular credit card. You will have to deposit a certain amount of money on the card, in order to secure it, so that your credit card company can keep the deposit if you default on your bill.
Protection for Retirement Accounts & Social Security
Your retirement accounts such as your 401 (k) are protected by federal law from your creditors during bankruptcy. Social security and social security disability checks are protected as well.
This means your creditors will not be able to go after your retirement funds or garnish your social security check in order to pay any outstanding debts no matter what chapter of bankruptcy that you file. You do have to be sure that you don’t do anything that removes the protection from your accounts.
If you take out any type of loans, you should not use your retirement fund as any type of collateral. By using your retirement as collateral, you could remove the protection provided by law. You also should not withdraw any money from your retirement account to pay for any outstanding debts or living expenses if possible. By using that money, you will lose the money that you have saved for your retirement and reduce your future source of income.
The key thing to remember is that your retirement income will be protected if you decide to file for bankruptcy. Schedule an appointment to talk with a bankruptcy attorney to determine if bankruptcy is the right option for you. Your age doesn’t matter. Your financial future does.