Here you are in your golden years and you’re also in overwhelming debt. The question now becomes “what should you do?” If you have retirement savings, you can use that to pay down debt, but then you won’t have anything left to live on. Or, a smarter choice, would be to keep your retirement savings, protect your pension(s) and/or retirement account(s), and declare Bankruptcy. This is also a very wise decision if you do not have retirement savings or pensions and you are counting on social security benefits only to support yourself and your family.
Some people are under the misconception that when they reach retirement age, they become what is known as “judgment proof.” On one hand this is correct and on another hand it is false. Creditors can still sue you for delinquent accounts and secure judgments against you even if you are over 62 and/or retired. If you are sued and lose, and then you fail to pay the court-ordered judgment amounts then the creditors can serve you with executions of the judgment and they can sweep your bank accounts. You will then have the right to request the court to “exempt” the funds if they were derived from social security, pension or retirement funds, and eventually have the funds returned to your account. Creditors cannot get attachments on your benefits from social security, pension or retirement accounts, but they can put liens on your property. Therefore, you are not fully protected or “judgment proof” just because you are retired and no longer have “wages.”
The alternative to this dilemma is Chapter 7 Bankruptcy. If you are living on pension funds and/or social security benefits, you will likely qualify easily for Bankruptcy, and your social security benefits, pensions and retirement accounts will be totally exempt in the Bankruptcy process. Ultimately, Bankruptcy will give you a “discharge” of your debts and you will be relieved of your obligation to pay your creditors.
Bankruptcy can also help you with delinquent or unpaid utilities, and foreclosures, as well.
Filing Bankruptcy in your golden years can help you wipe the slate clean so you can enjoy your retirement and have peace of mind.