Should seniors file bankruptcy?
You may be surprised to know that the fastest growing demographic group of bankruptcy filers is those over 65. This is because there fewer traditional pensions, there was a lot of availability to easy credit before the Great Recession, and seniors have been supporting younger family members more now than ever before.
But, if you are a senior in debt, or know a senior in debt, is it a good idea to file bankruptcy? For many seniors yes, but before you file bankruptcy you need to take into consideration a few points.
If you don’t have any assets:
1. Stop paying your creditors.
If you don’t own any assets and all of your income is from a pension or disability then a creditor cannot garnish these funds. Keep in mind that doing nothing doesn’t eliminate your debt. Your creditors can still call you, send you letters, and sue you. Of course even if they sue you they cannot enforce the judgment since you cannot garnish pension or disability wages.
2. Try to settle your debts directly with your creditors.
If you really feel an urge to settle your accounts then you can reach out to each creditor and let them know that you are on a fixed income and that you would want to settle your debt with them.
If you have assets:
If you have assets then you need to ensure that you meet with a licensed trustee in bankruptcy to determine if bankruptcy is the right option for you.
If you are nearing retirement age and still have looming debt whatever you do, don’t start pulling money out of your retirement accounts to pay down debt until you meet with a licensed trustee in bankruptcy. We see this common mistake on a weekly basis. Consumers who could have easily gotten rid of their debt in a bankruptcy have now depleted their retirement savings and have to put off retirement even longer.
Retiring with debt can be a stressful time. It’s important to know your current financial situation and how much money you realistically need for retirement. If you are close to retirement (or have already retired) and your financial situation is causing you stress, consider booking a free consultation with one of our licensed trustees in bankruptcy. We can provide solutions to deal with your debt load, stop the interest and phone calls, and your pensions and RRSPs may be protected.