Updated: Aug 16, 2022
Bankruptcy is a tool. While some people think it is taboo to talk about it or that it shouldn’t ever be used if you’re handling your accounts correctly, the reality is that it is a tool that you can use to help yourself if you’re dealing with overwhelming debt or debt with an income that doesn’t match.
As you approach retirement, now could be a good time to look into bankruptcy. Your income may be set at a certain rate once you retire, and that could mean that you’ll have a hard time paying down your debt or even paying everything you currently owe each month.
Going into bankruptcy before retirement could help you get the fresh financial beginning you want in retirement, so you have more income free when you’re on an income that is limited.
Your retirement income is safe from bankruptcy…mostly In most circumstances, your retirement income is safe from bankruptcy. Your 401(k) is generally off-limits, and you may have Social Security payments that are protected as well. Other assets and income aren’t protected, though. Additionally, once your retirement income hits your bank accounts, it could be at risk, too.
This is why it’s a good idea to consider bankruptcy if you see yourself strugglin
g with debt or bills right now. Before you have a retirement income or savings to worry about, consider look
ing into Chapter 7 or 13 bankruptcy to resolve outstanding debts and risks to the fine balance of your financial future.
Exemptions and other opportunities exist to save your assets While many people fear losing their assets in bankruptcy, you should know that there is an opportunity to maintain those assets. There are exemptions to protect retirement accounts, your home, your vehicle and other assets, so you can get support without necessarily having to start over from scratch.
Bankruptcy can help you if you’re approaching and see that you’re not going to be able to manage your bills or debts. While it is not a 100% guarantee of a perfect financial outlook, it can help you get closer to a balanced financial situation that you can manage more comfortably.