Aging Americans are facing a lot of financial struggles. Utility prices have skyrocketed, as have food prices. Inflation is hitting everybody pretty hard – but those who live on retirement income alone may be facing the most challenges.
For some senior citizens, the increase in prices and the fact that their benefits – while increasing a little each year – don’t keep pace with their needs, the situation has reached a breaking point. Health issues may have left them with medical debts they can’t pay, old loans may be haunting them and credit card bills may be slipping past their due dates.
But, is bankruptcy even an option for someone who is on Social Security? Here’s what you need to know:
Social Security benefits are considered exempt assets
Generally speaking, your Social Security benefits, whether retirement or disability, are considered exempt from the bankruptcy process – and from most garnishments. That means they cannot be garnished to repay any of your debts (with the exception of certain Federal taxes, delinquent child support or alimony).
For some people, that means they are essentially “judgment proof” when it comes to creditors. Even if a creditor tries to pursue a claim against you in court, they can’t enforce collection proceedings if you have no income or assets that can be attached.
Here’s why you might want to file anyhow
Just the same, bankruptcy may be something you need to consider. If you own your own home, for example, that does give your creditors a target. They can often get a judgment that will allow them to attach a lien to your property that will make it difficult to sell or eat away its value for your heirs.
Plus, many people simply cannot handle the stress of dealing with relentless calls and letters from their creditors. If you’re being hounded to the point where you’re stressed over the situation, bankruptcy can put a halt to the situation and allow you to move on in peace.