Why Are So Many Baby Boomers Filing For Bankruptcy?

For an increasing number of people in their fifties and sixties, the dream of a comfortable retirement is in jeopardy. The impact of layoffs, business failures, divorces and skyrocketing costs for health insurance, out of pocket medical expenses, and college for their children has caused the rate of bankruptcy filing for older people to triple since 1991. The shrinking social safety net isn't helping either, causing boomers to rely on credit cards and home equity loans to survive financially, racking up more debt, just when they should be saving money for retirement. Filing for bankruptcy can wipe out debts or make them more manageable, so it's a good idea to speak to an experienced Miami bankruptcy attorney to help you decide if filing for bankruptcy is the right choice for you.

How Bankruptcy Can Help Baby Boomers

The traditional wisdom has been that older people shouldn't file for bankruptcy because they will not have time to repair their credit. The reality is that older people who have paid off their mortgages and are not planning to start new businesses can often benefit from what bankruptcy can offer. Too many boomers, especially those under 59 1/2, are liquidating their individual retirements accounts to pay off debts, getting hit with early withdrawal penalties. In many cases, the total amount of funds in those accounts is not enough to pay off their debt, making this strategy a recipe for disaster. Even worse, some seniors are taking cash advances on credits and short term loans, escalating their financial difficulties. If you're having trouble paying your debt, it's important to speak to an experienced Miami bankruptcy attorney about how filing for Chapter 7 or Chapter 13 could help you.

Chapter 7 For Baby Boomers

Chapter 7 bankruptcy can eliminate all of your debts quickly if you qualify. It can clear out most of your unsecured debts, leaving more funds available to spend on your retirement. The downside of filing for Chapter 7 is that the bankruptcy trustee will be empowered to sell off your assets to pay creditors, so it's important to be aware of what assets are exempt from this process. There are certain provisions of Chapter 7 that are particularly useful for seniors, such as the exemption for 401(k) and IRA retirement accounts. It's also helpful that Florida's generous homestead exemption will currently exempt the entire value of your home if you've lived in it for more than 40 consecutive months. Filing for Chapter 7 is not for everyone, so it's important to speak to an experienced Miami bankruptcy attorney to determine whether it's right for you.

Chapter 13 For Baby Boomers

Baby boomers are finding the prospect of replacing the income from their career with the meager payouts from social security and/or a pension plan frightening. The scenario is especially ominous if they have substantial mortgage payments, unpaid student loans, medical debt, and other large financial liabilities. As more and more people have children later in life, they are facing retirement, along with the cost of their children's college tuition at the same time. Chapter 13 Bankruptcy can help you reduce your debts and develop an affordable payment plan that alleviates your stress while allowing you to retain your assets. An experienced Miami bankruptcy attorney can help you determine whether Chapter 13 bankruptcy is right for you.

Contact a Bankruptcy Attorney

If struggling to pay off debt is impeding your ability to plan for retirement, it's important to speak with a bankruptcy attorney to discuss how filing for Chapter 7 or Chapter 13 bankruptcy could help you.




Comments

Be the first to commment on this article.

Post a Comment