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Though retirement should be a period of financial stability for seniors, an increasing number of American retirees are faced with overwhelming debt. In fact, seniors represent the fastest growing demographic of bankruptcy petitioners. Unlike other groups, seniors have more equity in their homes and less opportunity to increase their incomes, so they face special considerations when filing for bankruptcy. That’s why it’s important for seniors in Aurora to consult with a bankruptcy attorney for help.

Social Security fund protection

Whether or not seniors file for bankruptcy petition, federal law exempts their Social Security funds from wage garnishment. However, seniors still need to protect their Social Security funds. When creditors obtain an order allowing for garnishment, they simply garnish the consumer’s bank account. This means the creditor might garnish a senior’s wages without knowing that the funds are from Social Security distribution, and therefore protected. To avoid this problem, seniors should keep a separate account for Social Security and notify their creditors in writing.

Retirement fund protection

Similar to Social Security funds, a senior’s retirement savings are protected against garnishment. Additionally, IRAs valued up to $1,095,000 are exempt. However, a senior with a large pension may not qualify for Chapter 7 liquidation bankruptcy. Instead, he or she may need file a Chapter 13 repayment plan. For seniors, it can be difficult to make Chapter 13 payments because they are not earning disposable income during retirement.

Home equity protection

Even though a debtor’s home equity is exempt in bankruptcy, this exemption varies by state. For this reason, seniors should consult with a bankruptcy attorney in Aurora about Chicago homestead exemptions. Seniors with high equity and low homestead exemptions may benefit from Chapter 13 bankruptcy, as this results in continued mortgage payments. However, this can be disadvantageous if a senior lacks the disposable income to pay off the loan. A Schaumburg bankruptcy lawyer can help determine whether a Chapter 13 bankruptcy plan if feasible.

Cutler & Associates, Ltd. is a bankruptcy law firm in Aurora with more than 30 years of combined legal experience. Each of our attorneys treats clients compassionately as they face the difficult decisions involved in bankruptcy. To schedule a free consultation with one of our bankruptcy attorney, call (847) 282-4899.