Senior and Bankruptcy

[late49er]

Hello Everyone,

I am 65 and my wife is 64. We have incurred a lot of debt in the last several years because of several surgeries, a heart attack and other physical issues. Because my employer reduced our insurance plan dramatically I have about $150,000 in medical bills outstanding and another 45,000 that I have run up on credit cards for drugs, etc.,

Anyway it looks like I will be out of work soon and will only have my social security and a small pension. There is no way to pay the bills I have. In reading up on the bankruptcy laws it seems I will have to wait a while before I file. I need for my income to drop.

I am underwater on my home but can afford to live there and have no real assets. I am wondering am I really judgment proof? I don`t believe my social security or pension can be garnished and really maybe I just back off for about a year and let things run their course.

I am figuring to change my phone numbers and simply avoid the collection folks. Don`t want another heart attack. Maybe I should change banks and get a secured credit card while my credit is ok.

Thanks for any advice.

[keepmine]

Nobody is judgment proof. You may be in a position where a judgment can't be executed.
Unless your wife is still working and has insurance coverage you may want to wait until she qualifies for medicare.
I'd be sure you are not banking with Wells Fargo or any bank that you have a debt you'll discharge in bk. Also, be absolutely certain the only money going into that account is from exempt sources. You don't want to comingle anything.
As to the means test. The 6 month lookback is just step 1. You still have to fill out schedules I and J to see if there is enough disposable income to fund a Chapter 13. Point is, just because you may be over the median does not necessarily mean you can't file a chapter 7.
Most bk lawyers will give afree or low cost inital consultation.Speak a few and get all of your options explained.

[dina13]

Hi late49er,

We've been in a situation similar to yours. We had credit card bills, but no assets, and almost no income. When we became delinquent with payments, calls and letters started, but I just turned off our ringer, and decided to ignore all the letters, unless it was an official summons (I was keeping all the letters, though, in case I need them later for proof, info, etc. I just didn't open them at the time). We didn't get sued for a year and a half, and when we got summons, then we looked into bk option, and filed ch.7.

I think if your income cannot be garnished, and your house is underwater, you really have nothing to lose. Just make sure your funds that are exempt from garnishment - SS, etc., are in a separate account, and not commingled with any other funds that could be garnished. Then they won't be able to put their hands on it, as you'll be able to easily prove the source of the money.

Also, from our experience with creditors (and that's been only credit card companies), the less you interact with them, the better for you. I mean if you need time, just stay quiet, and hopefully they'll leave you alone (won't sue) for months, if not years.

[dina13]

Sorry, I double posted. Not sure how to delete this.

[keepmine]

One other thought.
Be sure you get a medicare supplemental policy.

[Drazil65]

Hi, search these forums for google voice and set it up on your phone. No more calls from collectors (that you will choose to listen to anyway), makes life so much better once you stop paying. Good Luck.

[btbeme]

Here's the thing...

Life after a heart attack means a change in lifestyle. Positive changes yield positive results. And retirement is meant to be the privilege of having worked all your life. I see a lot of people who ought to be enjoying their last decade or two; instead, they are working well past the time they thought they would have to, and still barely scrape by.

I cannot imagine a life where I would have to change my phone number, unplug from every established pattern, and live with the shades drawn - if even for a couple of years - to simply try to wait out the debt collectors. As a few have mentioned here (and many have mentioned before) that cloud of debt will never really go away. There will be many ways for them to come back and - if not take a bite of your retirement money - will certainly become entanglements down the road. Forget that you might be "judgement-proof" in the sense that they may not be able to collect the money...that judgement can become a cloud on your ability to get a car loan, change insurance companies, or even distribute whatever assets you might have upon your death.

A Ch 7 bankruptcy would clear the decks and dissolve all the concerns. If you are under water on the house and continue to pay (do NOT reaffirm) then you should be able to stay. The rest of the debt can be eliminated. Even a Ch 13 would be a much better alternative than living in the shadows with the stress of overwhelming debt.

As others have, I also suggest that you spend some time speaking with several BK attorneys about a strategy for eliminating your debt. Yes, it may take a waiting period before you are able, but with an attorney's help, and using some of the strategies others suggest here, that waiting period can be much less stressful.

As for a post-BK lifestyle, that should also be part of your BK planning. Getting a secured credit card is pretty simple afterwards, as is managing your budget. You will likely know exactly what you will be receiving every month, so planning the outlay should be easy to do. If there are no hidden liens, judgements, etc to worry about, then planning your golden years post-BK should be easy.

[late49er]

Hello Everyone,

Thanks for the suggestions and kind words. It is difficult at this stage in life to have done it well the right way and still have these kind of issues to deal with. Really all we wanted was some time together without a lot of hassle but life happens and our medical issues have been overwhelming to say the least. It seems like a bankruptcy is the best way to go and simply wait until the right time to make it happen.

[keepmine]

Hello Everyone,

Thanks for the suggestions and kind words. It is difficult at this stage in life to have done it well the right way and still have these kind of issues to deal with. Really all we wanted was some time together without a lot of hassle but life happens and our medical issues have been overwhelming to say the least. It seems like a bankruptcy is the best way to go and simply wait until the right time to make it happen.

Absolutely! File when the timing will do you the most good.

[tobee43]

late49er, i really feel for you and totally understand you situation as we were in the same position, however we had an excess of over 200k of medical bills as well as a substantial amount of credit card balances due to the fact we also charged for the medical bills, not vacations or tv's etc. my spouse was over 60 and got laid off due to the illness as well as i was also laid off because i couldn't work anymore due to illness.

we ended up leaving and walking away from out home of over 30 years. we had max'ed out when we re-fi'ed, again, to cover medical costs, actually ALL of our debt was associated with medical bills. (thank God later the medical insurance changed and we are now covered between medicare and bc/bs 100%). however, it left us with nothing, we cashed out our 401's knowing it was wrong but thinking we could turn the situation around. but didn't. we ended up packing it up and walking away from it all. moved out of state, left no forwarding address or phone number.

we moved to a state where the ss and pension we have are enough to live comfortably without worry. after two years in our new state we filed bk so we could use this states wildcard as new jersey was terrible, or you could go federal, neither was as good as filing in florida. we had no way for the creditors to contact us so after we left we had no calls or anyone sending mail. we then filed and wiped them all out. after renting in fl for over 2 years we packed our money away, then purchased an owner financed home. paid it off last month in full and hopefully can live in peace for the remainder of our lives. life is certainly a challenge!

i know not everyone can just pick up and leave like we did. but i suggest you really give some thought as to what you are going to do. plan well, if you make the right choices which are all individual to each situation, i'm sure you will be just fine. best of luck to you!

[btbeme]

My past ravings about senior citizens and bankruptcy are well documented herein. The short summary is this: Most boomer-generation citizens would rather die homeless than suffer the indignity of reliance of federal support for basic needs. However, shit happens; so the BK code allows those who qualify to get a "fresh start" on their lives. That code cuts both ways - there are things you can do to shape your future, just as there are legalities that shape what you can slide under the bar at the BK hearing room. I feel - though the laws might differ - that retiring citizens should be given a much wider benefit toward clearing their decks via BK. Call it "strategic bankruptcy" if you want. Far too many older seasoned citizens who feel a job is the best way to satisfy their debts and who will not consider any alternatives.

I suggest again that a solid atty with an eye toward estate planning be part of your future. You will likely disagree with some of their conclusions, but we will be here to lend a voice if needed.

[ValleYum]

Sadly, I think Alabama has TERRIBLE bk exemptions. I think the exemptions should be the same in all 50 states - bankruptcy is a Federal court, right? Just my little 2 cents worth. Good luck to you and yours, keepmine!