Seniors often retire, having enough savings to lead a life of comfort. In these circumstances, any sign of a rise in debt could cause worry. While there might be some genuine reasons to worry about filing bankruptcy if you are overwhelmed in debt or risk, the loss of your savings could save your comfortable lifestyle and relieve you of all of your qualifying debt.
Types of Bankruptcy
There are two basic types of personal bankruptcy – Chapter 7 and Chapter 13. When you make a Chapter 7 filing, it allows you to discharge your unsecured debt. The only drawback of a Chapter 7 filing is that the bankruptcy court takes over your properties during the proceedings. In Chapter 13 filing, the amount of debt to be repaid and the time in which it is to be repaid is fixed, but on the positive side, you get to keep the possession of your properties.
Bankruptcy Exemptions Provided to Retirement Savings
There are several federal and state exemptions that apply to retirement savings. Under federal law, your retirement savings up to $1 million are protected. The retirement plans that are exempted include various ERISA qualified pension plans like:
- Money-purchase plans
- Profit-sharing plans
Money saved in general savings accounts and stock option plans would not qualify for these exemptions.
Even social security benefits are exempt from bankruptcy proceedings. These are protected with the help of federal laws. To get these social security exemptions, you have to ensure that these benefits are kept separate accounts from the rest of your income.
Bankruptcy after retirement is a sensible decision as there are several exemptions to your savings. With an experienced Fort Worth attorney, your bankruptcy proceedings after retirement could be done effortlessly.