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The elderly are less prepared for retirement and deeper in debt than ever before.
The Employee Benefit Research Institute’s 2013 Retirement Confidence Survey reveals that only 46% have saved less than a total of $10,000 towards retirement.
The think tank, in its report entitled, Debt of the Elderly and Near Elderly, 1992–2010, found that the percentage of households with credit card debt headed by someone age 75 or older doubled from 11% in 1998 to 22% in 2010.
A 2010 study from the University of Michigan Law School, called The Rise in Elder Bankruptcy Filings, found that those 65 and older are the fastest-growing segment of the U.S. population seeking bankruptcy protection.
Is it a good idea, or just more of the same?

Caught Between A Rock And A Hard Place
It used to be that the elderly scorned debt. As children of the Great Depression, they knew all too well the dangers of being in debt.
Over time, however, the realities of declining economic fortunes set in.  With fewer traditional pensions to fall back on, easy credit and a need to help younger family members survive financially, parents and grandparents began to march towards the red line of debt.
Bankruptcy Protects Social Security And Retirement Accounts
If you’re receiving Social Security benefits or have a retirement account, it’s not going to be taken when you file for bankruptcy.
In addition, the monthly Social Security benefits won’t be counted as income when deciding whether you make too much to file for bankruptcy to wipe out your debts without making payments through the court system.
Save Your Assets For Next-Of-Kin
You’ve been working your entire life. You want to be able to leave something to loved ones.
You may not be able to protect your assets from creditors in a probate proceeding to the same extent as would be possible in bankruptcy.
For that reason, it may make sense to use a bankruptcy filing as an estate planning mechanism.
Let The Golden Years Be Golden
You’ve got a choice.
You could spend your later years mired in debt, dealing with collection calls and letters from angry people demanding money.
Or you could enjoy some peace and quiet with loved ones, passing the days as you see fit.
As far as I’m concerned, the latter seems like the better choice. Even if you’ve got nothing that the creditors can take, the peace of mind offered by the protection of the bankruptcy laws is a powerful tool.

Want to buy a home after bankruptcy and qualify for a mortgage?
Thanks to various government programs, you can – and a lot faster than you would expect.
The government knows how many people file for bankruptcy each year, and recognizes that preventing them all from becoming homeowners would kill the real estate market.
Luckily there are a number of programs out there to help you get a mortgage after bankruptcy.

FHA Mortgages As Soon As 1 Year After Bankruptcy
Under the Federal Housing Authority’s Back To Work – Extenuating Circumstances program, you can qualify for an FHA mortgage if you filed for bankruptcy as a result of an economic hardship that caused more than a 20% drop in household income:

• for a Chapter 7 bankruptcy, a minimum of twelve (12) months have elapsed since the date of discharge;
• for a Chapter 13 bankruptcy that has gone to discharge, all required bankruptcy payments were made on-time;
• for a Chapter 13 bankruptcy that’s still pending, or a minimum of twelve (12) months of the pay-out period under the bankruptcy has elapsed and all required bankruptcy payments were made on time.

In all other situations, you must wait two (2) years after a Chapter 7 bankruptcy discharge and one (1) year after a Chapter 13 bankruptcy has been discharged or dismissed.
Related:

• FHA Back to Work – Extenuating Circumstances

Mortgages For Veterans
The U.S. Department of Veterans Affairs helps Servicemembers, Veterans, and eligible surviving spouses become homeowners by guaranteeing various home loans provided by private lenders.
Generally, Chapter 7 and Chapter 13 bankruptcies discharged more than 2 years ago may be disregarded for the purpose of a VA loan.
For bankruptcy cases discharged between 1-2 years, the lender will look to your recent post-bankruptcy history of satisfactory consumer payments as well as evidence that the bankruptcy was caused by circumstances beyond your control.
For people in a current Chapter 13 bankruptcy, the lender must document that the applicant has satisfactorily paid on the plan for at least 12 months. Court approval of the new loan is also required.
Related:

• Houston RLC Training Guide
• Lender’s Handbook (VA)

Going To Fannie And Freddie After Bankruptcy
Conventional mortgages tend to be originated under guidelines established by Fannie Mae and Freddie Mac.
If you filed a Chapter 7 bankruptcy, you’ll typically have to wait at least two years to be eligible for a mortgage if your bankruptcy was caused by extenuating circumstances. If no such circumstances exist, then you’ll have to wait four years.
If you filed a Chapter 13 bankruptcy then the minimum waiting period could be as little as one year from discharge.
Not Too Long To Wait
When you get out of bankruptcy there’s a good chance that you don’t have a lot in the way of savings. Take the time to get together a downpayment as well as a cushion to avoid future financial difficulties. By the time you’re ready, you’ll likely be able to apply for – and receive – a mortgage without much trouble at all.

Your creditors can force you into bankruptcy – literally and figuratively.
At least twice a week someone tells me that they’d never file for bankruptcy if only their creditors would “work with them.”
It’s as if the credit card companies, car lenders and mortgage banks are conspiring against you.
What you don’t know is that in some ways, they are doing just that.
Creditors Often Don’t Care If You File For Bankruptcy
When you go past due on a debt, the creditor will try to collect for awhile. Then, after 180 days, the creditor is required to charge-off the debt.
That doesn’t mean you don’t owe the money anymore, however. Charge-off is nothing more than an accounting term that means, “we don’t reasonably expect that this debt is going to be paid voluntarily.”
When the debt is charged off, most creditors will sell the account to a debt buyer. Often, the deal is done years in advance by means of a forward flow agreement (sometimes called a future flow agreement).
The creditor makes back some of the losses, takes a tax write-off for the rest of the unpaid balance, and is out of it entirely. If you pay the debt, the money goes to the debt buyer as profit.
Sometimes, Creditors Want You To File For Bankruptcy
If you file for a Chapter 13 bankruptcy, your creditors will get paid back some of what’s owed to them.  Secured creditors will be paid in full, as will folks like taxing authorities.
If you file a Chapter 7 bankruptcy and have non-exempt assets that the trustee takes and sells, your creditors will be paid through the proceeds of sale.
In both situations, creditors are happy with the prospect of you filing for bankruptcy.
Involuntary Bankruptcy – A Rare Situation
In very limited situations, creditors can formally force you into bankruptcy under either Chapter 7 or Chapter 11. This is called an involuntary bankruptcy, and can happen only in limited situations.
Related:

• 11 USC 303 – Involuntary Cases

If you have fewer than 12 creditors, just one creditor can file an involuntary bankruptcy petition against you. If you’ve got more than 12 creditors, at least 3 of them need to come together to file a bankruptcy case against you.
In order for a creditor to file an involuntary bankruptcy proceeding against you, that creditor must have a debt that’s not in dispute and prove to the court that you’re not paying your debts as they come due.
Involuntary bankruptcy is rare for individuals, and it’s used primarily if the creditors get together and see that you’ve got major assets that you’re trying to hide – assets they could get if you were in bankruptcy.
It’s rare because most people have institutional consumer creditors – Citibank, Chase, Wells Fargo and the like.  These companies have procedures in place for the sale of debts, recovery of money and other collection actions.
Involuntary bankruptcy is more expensive for them given the relative low debt level associated with each account.
Psychological Terror Tactics More Common
Though creditors don’t often force people into involuntary bankruptcy, it’s not uncommon for people to feel as if that’s exactly what’s happening.
Collection calls, threats of lawsuits and wage garnishments, and the general fear of uncertainty makes it feels as if they’re forcing you into a corner.
For some, bankruptcy provides an escape hatch. The law operates as a steel gate, slamming down between you and the companies that are terrorizing you day and night.
It happens far more often than involuntary bankruptcy, and that’s good because it provides you with control over your financial situation.
Your Remedy, Your Choice
In the end, bankruptcy is seldom truly involuntary. People who need the relief may feel as if they’re being forced into bankruptcy, but the reality is far different.
Look at your choices for debt relief and decide which one works best for you.

HOLIDAY DEBT CURES
By:  Steven P. Taylor, Attorney at Law
It is that holiday season again. A number of potential debt traps exist that could lead to long-term credit card bills for payment of holiday things such as Thanksgiving dinners and Christmas presents and the travel to each that we must pay for.
Black Friday has descended upon us; but the days that shoppers swarm the stores for deals and sales continues on. The holidays will come and go.  During this festive season,  it’s spend, spend, spend. Family and friends receive their gifts and are glowing with cheer, love and thankfulness. Somehow, we manage to scrape up the extra money–with just a little help from credit cards and overtime.
Then January comes, and with the unwelcome credit card bill requesting payments for the Yuletide cheer. Unfortunately, the house payment, car payment and utility payment that are due do not have grace periods that extend to your tax refund. The money has been spent on the gifts in your child’s room.
Soon, you are having heated phone conversations with creditors and utility companies.    The easiest way to avoid post holiday pain is to prepare. Below are a few tips on how your can avoid the holiday debt trap.

1. Set up the amount you are going to spend on the holidays in advance. Divide that number by 11 and set that amount back every month as your “holiday fund”. By Christmas time you have easily saved the amount needed for a stress fee holiday season.
2. Keep your holiday shopping to a minimal. Make a short list of the people you’re going to purchase gifts for and stick to it. Got a long list of friends and relatives? Still make a short list and send everyone else an inexpensive holiday card. Remember, the debt you take on could become your first steps towards new financial troubles, so be careful.
3. Use cash and avoid credit cards when making purchases. While credit card use may be “easy” and convenient when you’re holiday shopping, it can also be very expensive in the long-term. First of all, using a credit card will make you purchase more than you would if you were using cash. Second, it’s not likely that you will pay it all off before accruing interest. So avoid any credit card mess by leaving the plastic at home.
4. Liquidate assets. Sell unused clothes, shoes, books or other items that are collecting dust in storage. Be friends with E-Bay or garage sales. If it is in storage, you probably will never use them. It’s time to let go. Look for part-time side work. Every bit counts
5. Consider layaway plans. Layaway allows consumers to purchase items without paying for it first and still avoid debt. How it works? The consumer places their purchases in storage at the store while making payments on the purchases over time free of interest. Some stores do charge a small fee, which is nominal compared to the interest the post-bankruptcy debtor could rack up if they use a credit card for their holiday shopping.
6. The last resort should be credit cards. They are for you to borrow money short term you don’t have and usually carry with it a ridiculous APR. (Annual Percentage Rate. If you must use the credit option, use a low interest rate card and try to pay the balance in full at the end of the month so you are only paying back the exact amount you borrowed! Always know how you are going to repay the credit card in full in less than 2 months. Remember for Short Term Use only.
7. Of course, borrowers who do take on new holiday debt may be able to discharge that debt in Chapter 7 bankruptcy if they are unable to repay it. That being said, I hope you enjoy your holidays. Don’t let the stress of finances bog you down! Times are hard.

Happy Holidays!
Steven P. Taylor, [email protected]
Law Office of Steven P. Taylor PC
Serving Central and Northern Indiana
1-800-966-8447
Filed under: Chapter 7 Bankruptcy