It’s an unfortunate reality that, as you age, your health care needs and expenses tend to increase. With decreased contributions by employers to pension and retirement plans, as well as the rising costs of health care, it’s not uncommon for many retirees to find themselves over their heads in medical debt. Medical debt can be discharged in bankruptcy, but is it a good idea for a senior citizen to file for bankruptcy protection?
Though you can rid yourself of medical debt with a Chapter 7 filing, it’s important to understand that the bankruptcy only discharges those debts that you had at the time of filing. If your medical problems are ongoing, and you’ll only incur more medical debt, you may want to wait until you are health again (if that’s possible).
It’s also important to understand the impact a bankruptcy filing will have on your right to keep your home. You are allowed generous exemptions in New Jersey and Pennsylvania but they are not limitless. Getting a realistic and accurate idea of your home’s value is a good idea. If your home has too much equity, it would be sold in Chapter 7 and you would receive the dollar amount of your allowed exemption after paying any mortgages and sale costs. If you file under Chapter 13, you can “buy back” the non-exempt value through plan payments up to 60 months. You need to consult with a qualified bankruptcy attorney.
One thing NOT to do is to transfer the home to children or other relatives, unless they are going to pay fair market value. Again, the first step is to consult with an experienced bankruptcy attorney.
There is good news—in New Jersey, any IRA, pension, 401K and almost every other retirement plan is protected from any claim by a trustee or creditors. In Pennsylvania, the protection afforded IRA’s is more limited but substantial.
Contact Neuner & Ventura, LLP
We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.
Representing Clients across South Jersey