Retirees are not immune from being plagued with debt. Many retirees have to file for bankruptcy after being overwhelmed with debt after they have left the workforce. With little to no money coming in, except for a stipend from Social Security, it can be hard to catch up when falling behind on payments. Before considering filing for bankruptcy after retirement, there are some facts that you should be aware of.
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With the recessional economy, more and more people are being forced into an early retirement, especially if they are already at retirement age. Unfortunately, being forced into an early retirement does not necessarily mean access to retirement funds.
With the cost of living being so expensive, there’s a chance that retirees may not even have a retirement account to live off of after they finish working. The monthly stipend from Social Security may not be enough to pay a mortgage, loan or any credit card debt one may incur. If you find that you are having trouble buying for basic needs, you may have to consider filing bankruptcy.
Filing bankruptcy as a retiree is a bit different than filing bankruptcy while actively working. Bankruptcy is typically known as protection from creditors. Creditors can actively seek to garnish wages; however, if you are not working, there are no wages to be garnished. Pensions and Social Security payments are not usually subjected to garnishments; therefore creditors will not be able to garnish your pensions.
Filing bankruptcy means that you must disclose all assets and debt. Some assets may need to be turned over in order to pay the creditors; this may mean your house or car if no other assets exist. Before visiting a bankruptcy lawyer, be sure to consider this fact.
If you are prepared to surrender certain assets, then filing bankruptcy may be a valid option. Also be prepared that bankruptcy will significantly lower your credit rating, rendering it virtually impossible to take on any other credit forms. If you rely on credit cards or plan on taking out a personal loan for help, filing bankruptcy will prevent you from doing so.
Filing bankruptcy should be your last resort as a retiree. Due to the amount of time that it takes to rebuild credit after filing bankruptcy, it may not be a wise choice. Debt counseling is also a choice that you have and you can establish a debt repayment plan that will work for your budget. Consider filing for bankruptcy only after you have exhausted all other options, because it may not be the best choice.