Gray Bankruptcy In Illinois
Overall, the bankruptcy filing rate has declined since the 1990s. But the over-60 filing rate has more than tripled over the past thirty years. The double whammy of higher medical bills and lower public assistance benefits forces many older people into bankruptcy.
Since the Great Recession, medical bill inflation has usually outpaced overall inflation. Furthermore, modest Social Security increases usually aren’t enough to keep pace with the overall cost of living, especially for older people with significant medical debt.
As outlined below, these bankruptcies have some unique financial and emotional issues. A good Chicago bankruptcy lawyer must be prepared to deal with both these issues. Neither issue should ever get in the way of the financial fresh start that distressed debtors and their families deserve.
Many younger debtors have almost no assets. They may legally own a house, a car, or a small restaurant account, but these assets have practically no financial value. The opposite is true for many older people.
So, a Chicago bankruptcy lawyer basically has two jobs in a gray bankruptcy. An attorney must help debtors get rid of debts, and an attorney must also protect their assets. Such asset protection is usually available. Some examples include:
- Motor Vehicle: Most used cars (more than four or five years old) have practically no financial value. Illinois’ generous bankruptcy exemptions are usually more than enough to protect this small amount of equity. If the equity exceeds the exemption, the trustee (person who manages a bankruptcy for a judge) cannot touch that asset.
- Home: This exemption is based on an asset’s as-is cash value. That value is usually much lower than the appraised value, especially the inflated property values listed on tax assessor websites. Most home investors only offer pennies on the dollar for as-is cash sales. These negligible offers are almost always below the state equity exemption.
- Government Benefits: Social Security and other government benefits are usually exempt assets in bankruptcy proceedings. To maximize this exemption, we usually suggest that Social Security and other government benefit recipients put this money into a separate account. Always tread lightly in this area to avoid possible bankruptcy fraud charges.
- Retirement Account: The Supreme Court recently ruled, once again, that earned nest egg accounts, like IRAs and 401(k)s, are completely exempt regardless of their value. This exemption may also apply to other long-term savings accounts, like prepaid college tuition accounts.
These exemptions usually apply in Chapter 7 and Chapter 13 bankruptcies. Chapter 7 quickly eliminates medical bills and other unsecured debts. Chapter 13 gives debtors up to five years to catch up on past-due mortgage payments and other secured debts.
Many people who are over 60 grew up playing Monopoly. In this board game, when players declare bankruptcy, they lose the game and have no hope of getting back in it.
A real-life bankruptcy is a lot different. Bankruptcy gives people a fresh financial start, which they can either use or squander. If they use their fresh starts wisely, by the time the filing drops off their credit scores, many people don’t remember filing.
Contact a Thorough Cook County Lawyer
No matter what kind of financial problem you are having, a solution is usually available. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Convenient payment plans are available.