Retired people in Minnesota may want to consider filing for bankruptcy as a way to get rid of debt and protect their retirement assets. Qualifying for Chapter 7 bankruptcy is easy for some retired people, as this type of filing is based on the last six months of the filer's income and not what they have in savings. Social Security income is considered protected income and does not count in the calculation.
A retired person may file for Chapter 7 bankruptcy as long as they have at least $10,000 in unsecured debt. The amount of retirement savings that the filer has will not matter. If a retired person is having trouble paying off a second mortgage or they are dealing with income tax liens, Chapter 13 bankruptcy may be the best way to go. Filing for Chapter 13 bankruptcy could eliminate junior mortgages as well as home equity lines of credit in some cases.
The negative effects of a bankruptcy filing are often inconsequential for retirees. Although a bankruptcy filing will lower a person's credit score, having good credit is often of little importance to retired people because they have likely already purchased a home. There is also much less stigma about bankruptcy than their used to be and more access to credit-rebuilding help.
For some retirees, the bankruptcy process can have a lot more benefits than drawbacks. A lawyer may be able to help a retired person to determine whether filing for Chapter 13 bankruptcy makes sense in their situation. If there are alternatives to bankruptcy, a lawyer may be able to help a retired person to understand these options as well.