Individuals Families and
Small Business Owners
Bankruptcy may be the appropriate legal tool for certain elderly clients in DuPage County and nearby communities. Seniors can receive protection from unwanted collector contact and assistance maintaining financial independence. However, filing for bankruptcy may not be appropriate when seniors own too much or too little property. At the Bankruptcy Center of Illinois, we help clients understand their options. If bankruptcy makes sense, based on their particular circumstances, we represent them throughout the process. Our skilled DuPage county attorneys provide bankruptcy for the elderly to help stop collector harassment and regain control over finances.
All debtors considering bankruptcy are advised to evaluate certain factors concerning their finances. These include how much debt will realistically be discharged, how much property will be covered by exemptions, and whether their house or car carry debt. The elderly have particular considerations before filing for bankruptcy.
Seniors may not be able to afford filing for bankruptcy, may not need bankruptcy, or perhaps bankruptcy is not the right fit for their needs. A valid need for bankruptcy may include providing equity in property to heirs. If debts are eliminated, when a person dies, their heirs will benefit instead of creditors.
Chapter 7 bankruptcy allows for unsecured debts to be discharged, or wiped out. Unsecured debts include medical bills, and creditor card debt. Debtors must qualify for Chapter 7 by obtaining an income under a certain amount. This “median income” is set by the state. Often, senior citizens and elderly with limited incomes do fall within the median income limits. In many cases, Chapter 7 cases involve debtors that do not have assets above exemption limits.
Chapter 13 bankruptcy includes a debt repayment plan over a period of time, typically three to five years. Typically the debtor files for Chapter 13 when their income is too high to file under Chapter 7 or they have assets above the exemption limits. These types of bankruptcy filings tend to be more expensive.
One main consideration for seniors considering bankruptcy is that federal laws protect retirement incomes including social security, pensons, VA benefits, and disability. Income that is protected from debt collection will not be lost to debt collectors. In other words, it is not a valid concern to worry that monthly retirement income will be taken by a debt collector. Holding social security benefits in a separate county is advised, and they would be disclosed as part of income when filing for bankruptcy.
Another consideration is nonexempt assets. If a senior citizen owns a home that has equity above the Illinois homestead exemption, they may not want to file for Chapter 7 bankruptcy. A “Homestead exemption” is the amount of equity they can have in their home that is protected from creditors. Equity beyond what is protected by the homestead exemption is not covered and the balance could be used to repay debts.
Another issue to consider is whether there is significant debt with health care providers or credit card companies. Seniors may be concerned that their personal property will be taken to cover these outstanding payments. However, state exemptions usually include personal items as well as cars and furniture. Many elderly have personal assets that fall within the exemptions.
Retirement accounts typically qualify for exemptions during bankruptcy. If money is taken out of a retirement account, this will count toward income and can affect eligibility for bankruptcy. Additionally, funds withdrawn from a retirement account may count as cash in terms of exemptions.
When a senior citizen has a valid need to file for bankruptcy, our DuPage County debt relief attorneys can help. We are knowledgeable in federal laws that protect assets as well as specific Illinois laws concerning exemptions. If you are considering bankruptcy, contact our office to learn more about how the process will affect your assets. We can be reached by phone at (773) 993-0024 or online.