What is the Best Bankruptcy for Seniors?
As outlined below, the best bankruptcy for seniors usually depends on the type of debt the senior has.
Before the mid 1990s, almost no one asked this question, because almost no senior adults filed bankruptcy. However, the filing rate for the over-55 demographic has increased over 60 percent since 1991, even as the overall filing rate has declined steadily. Factors in the increase of gray bankruptcies (over 55 bankruptcies) include a shrinking social safety net, rising medical expenses, and longer lifespans (people outlive their savings).
Regardless of the best bankruptcy, a Chicago bankruptcy lawyer is an essential partner in the process. Bankruptcy petition preparers only fill out paperwork, and the legal process is far too complex to be a DIY weekend project. Furthermore, if seniors don’t get it right the first time, filing bankruptcy again after the waiting period expires is usually not an option. In other words, there’s no bankruptcy do-over.
Chapter 7
We mentioned high medical bills as a reason for increased bankruptcy filings among seniors above. In fact, high medical bills are the number one overall reason people file bankruptcy.
In most cases, Chapter 7 discharges medical bills and most other unsecured debts, like credit card bills, in less than six months.
Most seniors qualify for Chapter 7 bankruptcy. Most Chapter 7 filers must earn less than the average amount for that household size in that geographic area (per se means test). On the off-chance a debtor doesn’t pass the per se means test, a Chicago bankruptcy lawyer usually finds an open back door.
The paperwork in a Chapter 7 is incredibly complex. It’s like filing a corporate tax return without consulting the instructions.
After the initial filing, the remainder of the process is largely downhill, especially if the debtor anticipates what’s coming next.
For example, at a meeting with a bankruptcy trustee (person who oversees a bankruptcy for a judge), the debtor must present certain documents for inspection, such as tax returns, deeds, and insurance policies. Debtors without lawyers must often scramble for these documents at the last minute.
If the trustee approves the bankruptcy, most judges close them without requiring additional hearings. If a road block arises, and it often does, an attorney effectively deals with it, to keep the bankruptcy on track.
A Chapter 7 discharge order eliminates the legal obligation to repay a debt. However, the debt itself, along with a lien and any other collateral consequence of that debt, remains.
Chapter 13
The so-called wage earner plan gives debtors up to five years to catch up on past-due secured debt payments, such as home mortgage delinquencies. During the protected repayment period, creditors cannot take any adverse action against debtors, at least in most cases.
A Chapter 13 trustee must approve a repayment plan. A monthly debt consolidation payment must satisfy all allowed claims (mostly secured debt arrears) by the time the judge closes the bankruptcy.
In the event that monthly debt consolidation payment becomes unaffordable, an attorney can make a motion to modify the plan terms. Additionally, most debtors have an absolute right to convert to Chapter 7 at any time. This conversion means no more monthly payments and a quicker fresh start.
Work With a Compassionate Cook County Lawyer
No matter what kind of financial problem you are having, there’s a way out. For a free consultation with an experienced bankruptcy attorney in Chicago, contact the Bentz Holguin Law Firm, LLC. Virtual, home, and after-hours visits are available.
Source:
forbes.com/sites/nextavenue/2019/10/29/why-so-many-55-people-are-going-bankrupt-and-how-to-bounce-back/
