Bankruptcy in Retirement

Today’s economic situation has cast a shadow over the golden years of retirement for many seniors.  Diminishing pensions and meager Social Security payments have forced many retirees to rely on credit cards for basic living expenses such as food and clothing, never mind health care and mounting medical bills.  Filing a Chapter 7 bankruptcy can discharge such unsecured debt, and Florida’s homestead exemption allows debtors to remain in their homes.

According to a recent article on CNBC.com, persons aged 65 and above “are the fastest growing segment of the population seeking bankruptcy protection.”

The one downside to filing bankruptcy is that the debtor will no longer be able to use credit cards as readily as before.  While many people who file bankruptcy are able to obtain credit cards with low limits within a very short time following their bankruptcy discharge, they will not be able to purchase as much on credit as they did previously.  However, for married couples, it may be beneficial for one spouse to file bankruptcy, particularly if most of the credit card and other unsecured debt is in his or her name only.  That way, the other spouse’s credit is unaffected.