Living Well 60+ September-October 2014

y Doris Settles, Staff Writer
A fixed income with escalating
medical, utility, housing, food and
drug bills is a very real problem
for the over-50 population, causing
more and more seniors to face
some harsh realities about their
ability to continue to pay their
bills. Filing bankruptcy becomes
a possibility. Each situation is
highly individual, and no decision
or action should be taken without
checking first with your CPA and
then with a lawyer specializing in
bankruptcy law.
Simply put, bankruptcy is when
you owe more than you can possibly
afford to pay. Seniors may
be in a position to benefit from
certain protections.
“Federal law protects certain
benefits from garnishment by
creditors, including veterans’
payments, Social Security, disability
payments, most retirement
assets and more,” said Scott Dick,
a Lexington CPA. “Also, a senior
who has little or no income beyond
protected benefits could be
deemed ‘judgment proof,’ meaning
that creditors could not collect
even if they made the effort.”
The first step in determining a
course of action is to find out how
much you have and how much
you owe. To determine where you
SEPT/OCT 2 0 1 4
Is It Time to File Bankruptcy?
And
The Lafayette
opened
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are financially, inventory all your
liquid assets. Include retirement
funds, stocks, bonds, real estate,
vehicles, college savings accounts
and other non-bank account
funds. Decide on a rough estimate
for each item, then sum up your
total assets.
Next, collect and add up your
bills and credit statements. If the
total value of your assets is less
than the total amount of debt you
owe, declaring bankruptcy may be
one way out of a sticky financial
situation. However, bankruptcy
shouldn’t be approached casually.
And it’s not a simple, easy cure-all
for out-of-control spending.
“Going bankrupt” can happen
And And
The Lafayette The Lafayette
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“The Golden Girls” were fast “The becoming Golden friends Girls” were on their fast first becoming season on friends TV. on their first season on TV.
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one of two ways. Either you may
voluntarily claim bankruptcy
under Chapter 7 or Chapter 13,
or creditors can petition the court
to declare a person bankrupt. A
Chapter 7 bankruptcy liquidates
your assets to pay off as much of
your debt as possible. The cash
from your assets is distributed to
creditors such as banks and credit
card companies. For many, this
option offers a quick, fresh start.
But if a debtor owns a company,
a family home or any other personal
assets that he or she wants
to keep, Chapter 7 may not be the
best option.
A Chapter 13 bankruptcy is
THE predictable YEAR annual THE WAS income, YEAR 1985…
Chap-
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ter 13 offers a grace period. Any
debts remaining at the end of the
grace period are discharged.
Be aware, however, that filing
bankruptcy has a dark side.
Except in rare instances, it doesn’t
discharge debts from mortgages,
student loans, taxes, alimony
or child support. You can file
for bankruptcy for about $300
without a lawyer, but the laws are
complicated.
“In considering bankruptcy,
it’s important to understand the
Homestead Exemptions applicable
to your state, as those laws
may protect your home and your
THE YEAR WAS
equity
1985…
from creditors in a bankruptcy
filing,” said Dick. “It’s a
Ronald Reagan was the 40th good president. idea to consult a lawyer specializing
on their in first bankruptcy season to on be TV. sure
“The Golden Girls” were fast becoming friends
A gallon of gas cost one dollar and that twenty the decision cents. to file will indeed
Consult lawyer or CPA before taking action
also known as a reorganization
bankruptcy. Chapter13 enables
people to pay off their debts over
a period of three to five years. For
individuals who have consistent,
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give you the help you want.”
With a good lawyer and the
right information, filing bankruptcy
could give you the financial
footing you need to move forward.
Retirement Living
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