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Do retirees deal with bankruptcy?

| Mar 12, 2021 | Blog, Chapter 7 Bankruptcy

Retirement is not always a carefree time for everyone. Some residents of Mississippi find their golden years plagued by money issues. Without a nest egg, retirees may suffer from heavy debts. Even a generous pension might not cover living and other expenses. Solutions may exist for those drowning in debt obligations, including filing for Chapter 7 bankruptcy protection. Even a retired person could explore their options in bankruptcy court.

The debt explosion during retirement years

Not everyone plans on entering retirement heavily in debt. Unexpected problems, such as medical expenses, could lead to financial collapse. A retired person may no have the option of returning to work or procuring the same income level as before, so paying off mountains of debt seems impossible.

Small steps to alleviate debt may also help, but cutting back on a budget only goes so far. When debts far exceed assets and no solutions to reversing the situation appear impossible, filing for Chapter 7 may be necessary.

Filing for Chapter 7 bankruptcy

Filing for Chapter 7 bankruptcy occurs in federal court. Unlike other types of bankruptcy, Chapter 7 does not involve repayment plans. Instead, nonexempt assets pay off some debts while other obligations could end up discharged. The debtor keeps exempt property and no longer deals with creditors and collection agencies.

Since the bankruptcy process is a legal proceeding, the debtor must follow all rules and requirements. Failing to do so could lead to severe repercussions, so it may be beneficial to work with an attorney. An attorney may explain the Chapter 7 bankruptcy process and how to file as well as represent the client in court.