Filing bankruptcy in retirement may not be such a bad idea

People 65 and older are the fastest-growing segment of the population seeking bankruptcy protection.

Of course, the big question most seniors have when it comes to bankruptcy is: Will they take all of my retirement savings and leave me penniless?

"No," Connolly said. "Social Security and retirement accounts (up to approximately $1.1 million) are exempt from creditors so seniors will continue to have that stream of income."

What's more, many states have "homestead exemption" laws, which protect home equity from creditors. In Massachusetts, for example, you're protected up to $500,000.

And, while some may be worried about a bankruptcy filing negatively impacting their credit score, Connolly says that shouldn't be a concern for seniors. A credit score is most important when making a big purchase like a car or home — things most seniors won't be buying in the future.

http://www.usatoday.com/money/perfi/ret ... htm?csp=34



I'm really not sure what I think about this idea......

read the article earlier. it's sad for some seniors to have to go this route. i still can't envision all the ramifications of doing this - for the individual and the businesses involved.

Many seniors now are no better off than the unemployed....only they can't get unemployment insurance. Social Security helps, but there are few who can live a decent life on that alone. Their nest eggs have declined, and they have a just about zero chance of picking up a part time job in this economy. I know bankruptcy is an idea that most of my generation reject....there is a historical shame to the very idea of filing for bankruptcy....it is an admission of failure. I suspect it will remain a very last resort for current seniors.

Or I heard a story on NPR about seniors who had stopped paying off their monthly mortgage payments, hoping they die before the company is able to catch up with them on the massive number of foreclosures.

My mom lives in an Erickson community and says several residents have run out of money. The residents have fundraisers to help them keep their apartments.

It IS really sad. She said this year the cost went up 1%, which is not bad, considering you get all utilities except cable.

Still, for people who bought in and had a nest egg they thought would be sufficient, it must be terrifying.

But as bad as it is for seniors, that generation has more wealth than other generations right now. Luckily the other generations do have more time to come back from thier investment losses.

I have a problem with the seniors who are wracking up all kinds of debt and then filing bankruptcy. I saw a news story about this a few weeks ago, on MSNBC. I also have a problem with those doing it and then paying tiny amounts, knowing their kin will get saddled with it, or even those wracking it up, knowing it will disappear when they die, cause they have no kin or estate to pay it.

That's just screwing the rest of us.

But if this si the ONLY way they can get through without living on the street, then it;s what they have to do.

Until you put it in the context of "seniors who planned for their retirements and didn't expect to BE in-debt, and then had their retirement accounts dissolved by Wall Street greed and risk-taking", I don't know that I'd want to walk in their shoes. (I wonder how many will have to file bankruptcy because they THOUGHT they were going to be financially secure by investing with Bernie Madoff?... Or in loan-portfolios with a well-known, stable company like Countrywide Financial?...Or Wells-Fargo....Or Goldman-Sachs?)

Oh, I keep forgetting... "They should have known"... They should have seen through the lies in the Prospectus and the financial statements... How stupid of them....

First off, by far the largest hand removing the wealth that many seniors thought would tide them through is the intentional devaluing of the USD by the Fed and the federal government. Secondly, if you were leaving a large share of your retirement savings in a growth account instead of less risky investments such as treasuries, municipal bonds or perhaps utilities, then yes, you should have known better than to take risks with money you were counting on needing later on.

Bernie Madoff preyed upon other evil rick people with multiple millions of dollars. To imply that a large share of the people he defrauded were average income middle class retirees is, at best, disingenuous. And wasn't it Fanny and Freddie, via the federal taxpayer mind you, that guaranteed all of those mortgage backed securities? Seems to me that here again the federal government is responsible for creating the conditions that led to the risk taking on Wall Street. After all, if you guarantee me that you will replace any money I lose, regardless of how foolishly it was lost, you can bet your bottom dollar that risk isn't going to be high on the list of reasons why I shouldn't plunk down a wad of cash on number 17 at the Roulette table.

Oh, I keep forgetting... "They should have known"... They should have seen through the lies in the Prospectus and the financial statements... How stupid of them... If they were told that their investments "weren't risky" by an entity or a broker that they trusted, well they should have known anyway.

I keep forgetting that EVERYONE is supposed to be as smart and savvy as the trickle-down supply-siders... Silly me.