When you’re nearing retirement or are already in retirement, you may be focused on getting your finances in order to live more comfortably on a defined and structured income. Many people go into retirement with a decreased income and live on Social Security, their 401(k) and other limited sources of money.
If a spouse passes away or a new debt is accrued, it can make living difficult on a limited income. With few ways to get more to pay down those debts, it could be hard to ever see a way out.
Why are some elderly individuals ending up in tough financial straits?
There are many reasons why someone might end up in a difficult financial position. In elderly or retired homes, it’s more common for individuals to deal with financial trouble after the loss of a spouse, for example, and the added expenses of a funeral, burial and medical debt.
Medical debt is a major contributing factor in situations where the retired look into bankruptcy. This is because medical debt does not go away when someone dies. Instead, the person’s estate is responsible for handling that debt. If a good estate plan is not in place to prevent assets from being accessed by creditors, then it’s possible to lose a great portion of that estate to the debt. This could, in some cases, practically leave people in financial ruin.
With an income that is the same each week or month, trying to handle these extra debts can be overwhelming. That’s why people who find themselves in this situation should consider looking into bankruptcy.
How can bankruptcy help those in retirement?
Personal bankruptcy can help those in retirement wipe out debts and preserve their assets in many cases. Certain income sources, like Social Security income, are exempt from wage garnishment, levy or other situations where they could be lost to creditors. Having to go into bankruptcy doesn’t necessarily mean that you’ll lose any of your assets or income, but it could mean wiping out the debts that you can’t afford to cover.
Know your rights. Bankruptcy isn’t always negative, and it could be the right option when you’re on a fixed income.