Retirement And Bankruptcy: Three Things To Consider
Many residents of West Palm Beach are nearing retirement or have recently retired. After you have retired and are no longer thinking about work, the prospect of filing for consumer bankruptcy can be daunting. Yet for many older adults in South Florida, bankruptcy is an extremely helpful tool for those individuals who are struggling with debt. In older age, many different kinds of unexpected financial matters can arise, from sudden medical expenses to shifts in retirement account values. The following are three things to consider when it comes to retirement and bankruptcy in Florida.
- Retired People Must Still Be Eligible to File for Bankruptcy
Even if you are retired, you must still be eligible for the type of bankruptcy for which you are planning to file. Accordingly, if you want to file for a Chapter 7 bankruptcy, you will need to be able to pass the means test in order to be eligible. Chapter 13 bankruptcy eligibility can be more complex in some cases for retirees since a debtor in a Chapter 13 case must be able to show that they are able to make regular payments as part of the debt reorganization plan.
- Retirement Accounts Are Largely Exempt
Most types of retirement benefits are exempt from bankruptcy under Florida law. Types of retirement accounts that are fully exempt include 401(k) accounts, 403(b) accounts, up to $1,512,350 in IRAs and Roth IRAs, defined-benefit plans, profit-sharing plans, and many other types of pension plans. Social Security benefits are also exempt, as are veterans’ benefits.
- You May Not Have Assets That a Creditor Can Take
For a number of retired Floridians, it may be that you do not have any assets that a creditor could take in the event a creditor or debt collector filed a lawsuit against you or attempted to garnish an account. Many types of assets held in retirement cannot be taken by creditors, and Social Security benefits and VA benefits generally cannot be taken by creditors, as an article in Forbes underscores. As such, if these are your only assets in retirement, even if you owe a significant amount of debt due to an unexpected medical emergency, for example, it might not make sense to go through the bankruptcy process since a debt collector may not be able to take meaningful action against you. You should seek advice from a lawyer about the particular facts of your situation before you make a decision about whether to file for bankruptcy.
Contact a West Palm Beach Bankruptcy Attorney Today
If you are considering bankruptcy and you are already retired or nearing retirement, it is essential to seek advice from an experienced lawyer about your circumstances. For many older adults, bankruptcy cases can be extremely helpful, but it is important to get advice about the particular facts of your case before you move forward with a bankruptcy filing. One of the experienced West Palm Beach bankruptcy attorneys at Kelley, Fulton, Kaplan & Eller can speak with you today about your options for debt relief.