Bankruptcy and the Elderly

The Phoenix bankruptcy lawyers at Want A Fresh Start understand that the aging process can be a financially difficult time. As we grow older, medical bills accrue and pensions have begun to decrease along with social security allotments. These factors, combined with disabilities common to the elderly, can preclude them from working, meaning that old age is one of the easiest times to fall into large debt. There are some benefits for seniors above other citizens when it comes to filing for bankruptcy in Arizona, and filing can help in many cases. Some of the ways seniors are particularly well-suited for a bankruptcy claim and some examples of how the process can help them live more comfortably are listed below.

Medical Bills

Medical bills are, unfortunately, one of the leading causes of excessive debt in the U.S. This is particularly true among senior citizens, meaning that they, more than anyone, may benefit from having this debt discharged. One of the primary functions of bankruptcy is the removal of medical debts and costs. Chapter 7 bankruptcy in Arizona, for example, has the ability to entirely remove medical bills within the span of a few months.

That said, if you plan to file for the sake of removing your medical debt, it is important to wait until all costly medical procedures have concluded. Bankruptcy will only eliminate existing debts, so if ongoing treatment is occurring, it may be wise to wait until it has concluded to file.

Home Equity

Often, by the time we become senior citizens, we have allocated our resources to ensuring we own our homes outright. This means a substantial portion of equity has usually been allocated to the home, and it is important that this remains safe during bankruptcy proceedings. Many states, Arizona included, provide home exemptions that will help protect your property. In Arizona, up to $150,000 is exempt from liquidation during a bankruptcy proceeding. If your home has a higher value than this, it is a good idea to speak with a Phoenix, AZ bankruptcy attorney regarding ways to protect your house.

Retirement Accounts

One benefit especially helpful to the elderly is that most pension and retirement accounts stand exempt from liquidation during Chapter 7. The money you have spent years putting back will not be jeopardized by filing bankruptcy, and if it is your primary source of livelihood, you may rest assured knowing that the Chapter 7 proceedings cannot garnish any of your money from those sources. It should be noted that only legitimate retirement accounts, such as 401(k)s, 403(b)s, state or district pensions, and IRAs are protected. If your assets lie in other types of accounts, they may be subject to confiscation.

Social Security

When attempting to file for bankruptcy, each person needs to submit their financial records for analysis to determine eligibility. This analysis, called a means test, weighs individual income against the median income for the state and decides. Chapter 7 bankruptcy is determined a viable option based on its findings. If your income is below the median for your area, you are safe to file under this chapter. If not, you’ll be forced to file under Chapter 13 bankruptcy.

Seniors have an advantage in this area, as well. Social security payments received are not appraised in the means test, meaning that if your primary income is social security, you will almost certainly qualify. There are instances in which the analysis can find an excess of disposable income and a rejection could result, but if your salary falls below the median, you are generally free to pursue Chapter 7.

Filing for bankruptcy in Arizona is a huge decision, and one that is best undertaken using the guidance of a seasoned Phoenix bankruptcy lawyer. For information on the pros and cons of filing for your specific situation, contact one of our bankruptcy attorneys.