Anyone can find themselves in debt considering that it is almost impossible to survive without credit cards. Accumulated bills including those of emergency medical charges, student loan, car loan, mortgage, etc. can pile up with time, making it almost impossible to survive without declaring bankruptcy. Senior citizens these days have a longer life expectancy which adds up to financial woes. Getting a job at their age is nearly impossible and medical bills adding to the already shooting debt leads them in a never-ending cycle of debt. This often causes them to be harassed by creditors and live with a worry of leaving their kids and grandkids a debt-laden inheritance. It is important to take legal assistance if you are struggling with debt say Los Angeles based law firm https://bankruptcy.recoverylawgroup.com/.
Debt relief for seniors
Filing for bankruptcy is the best option available for seniors who are struggling with debts. Individual consumers can choose to file under Chapter 7 or Chapter 13 depending on your income and assets. Under Chapter 7 bankruptcy, your assets are separated into an exempt and non-exempt category, where the non-exempt property is sold off to pay creditors. According to California’s bankruptcy exemptions, nearly all assets of the debtor are exempted, thereby protected. Thus, at the end of Chapter 7 bankruptcy your unsecured debts like credit card bills, medical bills, etc. are discharged. It is important to understand that people with exceptionally low income only can manage to qualify for Chapter 7 bankruptcy. For those, who are unable to pass the “means test”, Chapter 13 is the next option available.
As per Chapter 13 bankruptcy, a repayment plan is devised depending on your income and assets. The debtor makes payment for a 3-5 year period after which any remaining debt is discharged. Filing for bankruptcy provides the debtor with the benefit of the automatic stay which prevents any collection action by creditors. Majority of unsecured debts including personal loan, bills (medical and credit card), etc. is discharged after bankruptcy. However, some debts like a student loan, child and spousal support and any taxes assimilated in the three years prior to a bankruptcy filing cannot be discharged.
Chapter 7 bankruptcy
If you are able to pass the “means test” and qualify for Chapter 7 bankruptcy, you are able to protect almost all your assets including retirement account. This is so because federal law keeps pensions, 401(k)s, social security benefits and some profit sharing plan safe from creditors during bankruptcy. All of these assets, to the tune of 41.245 million are safe from creditors.
Another major concern of debtors is for their home. The California homestead exemption ensures that your property is protected. California offers 2 sets of exemptions during bankruptcy. You can consult your bankruptcy lawyer to find out which of the two exemption works best for your property. These exceptions cover your equity in the home. If your equity is less than the exemption, your home is safe from creditors. Single, non-disabled senior citizen of 65 years can have property exemption up to $75,000 under System 1 bankruptcy exemptions of California. Seniors above the age of 65 can protect equity up to $175,000. Under California System 2 bankruptcy exemptions, you can protect up to $25,575 of your equity in the home. This exemption can be used for residential property and can cover assets like apartment, boat, condo, home or a stock cooperative.
Seniors who are able to successfully file for Chapter 7 bankruptcy can save all their important assets while getting a discharge of their unsecured debts. This bankruptcy chapter is ideal also for those who don’t have any assets. At the end of your bankruptcy and your debts are discharged and you either have to pay a small amount or none at all to your creditors.
Chapter 13 bankruptcy
People who fail to qualify for Chapter 7 bankruptcy have the option of filing under Chapter 13. In this case, a repayment plan is devised according to your income. Unlike Chapter 7 you are not required to surrender any assets in this case. Chapter 13 bankruptcy is preferred over Chapter 7 if you wish to protect all your assets which are not covered under exemptions. After the end of the repayment plan, all remaining unsecured debts are discharged.
Why do people fear bankruptcy?
There is a stigma attached to bankruptcy which makes people avoid it despite it being the best legal option available to deal with insurmountable debts. As debt accumulation does not depend on the individual’s age, many senior citizens also find themselves grappling alone with debts. Since they are nervous about the consequences, they often delay filing for bankruptcy. If you require professional assistance regarding unmanageable debts, call 888-297-6203 to speak with expert bankruptcy lawyers.
It has been observed that people over 65 years have nearly 50% more debt than people of another age group. Misconceptions like you will be dragged to bankruptcy court if you file for bankruptcy also add fuel to fire. Bankruptcy filing involves just a minor hearing which takes place between bankruptcy trustee, debtor, and their attorney; creditors may or may not attend the hearing. In fact, the 341 hearing is less stressful than constantly handling or dodging creditor’s harassing calls. It is important to weigh all your options before filing for bankruptcy. Consulting with an expert bankruptcy attorney opens all options before you to tackle the huge amount of debt.