There are plenty of reasons for retirees to love Florida, besides the mild winters and warm summers. The cost of living is near the national average, there is no state income tax, and retirement income is exempt. Despite these benefits, more seniors are filing for bankruptcy than ever before. At Lewis Roberts, PA, I help clients navigate the complex requirements for filing bankruptcy.
Average Expenses for Seniors
The Meredith Corporation reports that $280,000 is the average amount a married couple aged 65 will need to cover medical bills and health care costs in retirement. This number assumes they are both on original Medicare and includes premiums for Part D and Part B coverage. Other costs included in this amount are average out-of-pocket expenses for deductibles as well as medical devices, such as hearing aids, and services not covered by Medicare. If you are living on a fixed income, this can put a significant dent in your retirement plans.
Rising Healthcare Costs
Seniors have unique health challenges. Chronic conditions such as arthritis, Alzheimer’s disease, cancer, osteoporosis and heart disease are among the most common concerns. For individuals who live with one or more of these issues, medical debt can become an avalanche of bills very quickly. Retirees who have always been able to pay their bills, suddenly find themselves using credit cards to get by, racking up even more debt.
Discharging Medical Debt
While there is no such thing as “Medical Bankruptcy,” Chapter 7 treats it the same way as personal loans, credit cards or old utility bills. When you file for bankruptcy, all debt, personal property and real estate must be listed. The process typically lasts three months. If all goes as expected, you’ll receive debt forgiveness. Secured debt, student loans and property may be treated differently than medical debt and may require a different financial option.
Keeping Retirement Accounts
Federal law protects the vast majority of tax-exempt retirement accounts if you file bankruptcy, including the following:
- Profit-sharing and money purchase plans,
- Defined-benefit plans
Social Security and Social Security Disability are protected from creditors. The income is also not counted, which means if SSI is your only income, you likely qualify for Chapter 7.
Contact a Lake Mary Attorney Today
If you or your spouse is in the midst of a medical crisis, it may benefit you to wait until it has resolved before continuing with the paperwork. An attorney experienced in bankruptcy can help determine the best time to file and discuss what to expect throughout the process. Visit our webpage to learn more about this topic or call us at 407-749-0080 to schedule a consultation.