As you’ve gotten older, the one thing you always dealt with was debt. Every time you paid it off, it seemed like it came back again. Now, in your retirement, you have debt from a medical emergency and no way to pay it off. Your credit cards were maxed out paying for bills you couldn’t afford while you were ill, and your fixed income isn’t enough to cover what you need.
Is it reasonable to look into bankruptcy, or will it hurt you if you do? The simple answer is that a bankruptcy could be more helpful than you thought it would be. Here’s what you should know as a senior citizen.
- Living on a fixed income is tough, but bankruptcy can help
You are someone in the kind of position that bankruptcy was designed for. If you cannot afford the necessities and also pay down your debt, then it is reasonable to look into bankruptcy as a solution. Bankruptcy may help you wipe out unsecured debts, like medical debt, so that you can move forward in your life without that debt hanging over your head.
- Social Security is protected
Social Security payments are normally protected during bankruptcy. That means that you shouldn’t worry about losing your income just because you need bankruptcy protections. That said, you should keep your Social Security in a separate account so that it isn’t mixed in with other assets that could be liquidated.
- Your 401(k) is protected
If you’re getting income from your 401(k), you’ll be happy to know that it is protected in the case of bankruptcy. If your 401(k) deposits into your bank account, there’s a chance that the money there could be used to pay down your debts, but in most cases, you’ll be able to work with exemptions to avoid losing that retirement income.
If you’re on a fixed income in retirement, you can still find a way out of debt. Bankruptcy could be a good choice for you if you would like to wipe out unsecured debts and find better financial footing as you move forward.