Bankruptcy Help For Seniors – Advice From A Baltimore Bankruptcy Attorney
Due to rising costs, seniors are often faced with medical bills or other debts they can’t pay. Older adults facing bankruptcy have special considerations that don’t affect other groups. Here is helpful advice for seniors from an experienced Baltimore bankruptcy attorney.
Medical expenses are a leading cause of bankruptcy for persons over the retirement age. In many cases, health insurance does not cover your costs at no fault of your own. Bankruptcy can completely eliminate debt due to medical bills. In fact, medical debt is one of the least complicated debts that can be discharged under Chapter 7 bankruptcy.
It is wise to consult with an experienced attorney before filing for bankruptcy since timing is crucial. You want to make sure you don’t get stuck with additional medical debt after filing. For example, if you know you are going to have a costly surgical procedure soon, it might be best to file for bankruptcy after surgery. Remember, once you file for Chapter 7 you have to wait at least 8 years before you can file for Chapter 7 bankruptcy again.
Medical Debt Is Nonpriority And Unsecured
Nonpriority debts are the last debts that get paid in Chapter 7. However, the bankruptcy process does discharge (“wipe clean”) these debts. The reason that they are unsecured is because there is no collateral, such as a home or car, to back up medical related debts.
The Means Test
Before you can file for Chapter 7 bankruptcy, you must pass a means test. This test determines if you qualify for bankruptcy based on several factors such as your disposable income. If your income is too high, you will not qualify for Chapter 7. Your Social Security benefits, however, are not included in your disposable income calculation. A bankruptcy lawyer can help you make the calculations to see if you pass the means test.
The Homestead Exemption
In Chapter 7, some of your property and assets are sold to pay off your debt. The law protects some of these assets though, including home equity. The homestead exemption covers equity you have in your home up to a certain amount. The legislation regarding the homestead exemption for seniors is subject to change, and an experienced attorney can inform you about the exact amounts you can claim.
Most legitimate tax exempt retirement accounts are also protected from bankruptcy. This can include plans such as:
- 401 (k)
- 403 (b)
- Profit sharing
- Money purchase
- Roth IRA
Some of these accounts may have exemption limits, such as the IRAs and Roth IRAs, so be sure to check with your lawyer.
Need More Info?
Contact Sirody & Associates for a FREE Consultation and advice from lawyers that have practiced bankruptcy law for over 20 years. Let our attorneys work to get you back on your feet.