Sometimes pride can be a great detriment to one's right to financial peace of mind. Pride can prevent a retired person from filing bankruptcy when the need arises. There are many reasons why a retired person residing in Arkansas or another state will have a legitimate need to file for federal debt relief. When that need occurs, the failure to file bankruptcy can sometimes mean the failure to protect one's retirement assets from creditors.
A Chapter 7 bankruptcy filing by a retired person can mean the difference between cashing in and distributing one's retirement funds to creditors or saving those funds for one's retirement and for distribution to his or her beneficiaries upon death. Without the bankruptcy, creditors can sue and reduce to judgment all medical bills, credit card debt and other personal loans. The judgments then justify the seizure of the debtor's assets, including but not limited to bank accounts, stock and bond certificates, certificates of deposit and retirement investment accounts.
Conversely, federal law protects retirement funds from the grasp of the Chapter 7 Trustee and creditors. That means that one can discharge and wipe out a large amount of credit card debt, medical bills and other personal loans without relinquishing one's retirement funds and Social Security benefits duly established under federal law. At the same time, retirees can usually be successful in retaining their home residences in a Chapter 7 proceeding.
That is done through the exercise of exemptions provided under federal or state law. It is imperative that retirees residing in Arkansas and other states who have overburdening debt take a hard look at the benefits of a bankruptcy filing. One can usually keep his or her personal property, furnishings, belongings, residence, retirement assets and other basic assets under the exemptions provided by law. This is accomplished while wiping out all unsecured debt that is impinging on the retiree's peace of mind.
Source: The New York Times, "Bankruptcy Can Help Seniors Protect Assets", Constance Gustke, May 13, 2015