Retirement is a thought on the minds of many California adults. If you are at retirement age and have significant debt, retire with significant debt, filing for bankruptcy could be the right move.
Taking the means test
The means test is a commonly used test measuring your income and ability to pay off your debt. You’ll first need an Official Form 122A-2 form, which lets you make and submit your calculations. Fortunately for retired individuals, bankruptcy courts don’t consider Social Security benefits, such as retirement savings or pensions, are often protected. If you have a large disposable income, qualifying for Chapter 13 bankruptcy could be your only option.
Choosing between Chapter 7 or 13 bankruptcy
Consumers can protect themselves financially by entering Chapter 7 or 13 bankruptcy. Chapter 7 bankruptcy can wipe out an infinite amount of debt. However, this form of bankruptcy also risks assets from creditors possessing them, including your homes and vehicles.
Filing for Chapter 13 bankruptcy lets you hold onto your assets. However, you must agree to a court-supervised repayment plan that lasts three or five years.
Which form of bankruptcy should you choose?
Before making your final decision about bankruptcy during retirement, ask yourself the following questions to make the best decision:
- Can your disposable income cover your debt repayments?
- Are you willing to risk losing certain assets?
- Is entering into bankruptcy worth the credit hit?
Filing for bankruptcy during retirement can be a great way to resolve older and recent debts. As you continue the bankruptcy process, learning how to save and balance money can save you from repeatedly filing for bankruptcy.