Senior Citizen Bankruptcy: The Ultimate Guide to Declaring Bankruptcy as a Senior

Senior citizen bankruptcy requires different considerations than bankruptcy for a younger person. If you are interested in filing for bankruptcy as a senior citizen, this guide covers everything you need to know.

Senior Citizen Bankruptcy in Sarasota, Florida


While bankruptcy is not necessarily something to be proud of, it is one of the most effective ways to get a fresh start in life, no matter your age.

However, if you are getting older or are a retiree, some things are simply not possible to do despite how energetic you might feel. Fortunately, filing for bankruptcy is not one of those things, as retirees and older adults file bankruptcy all the time.

Still, it is important to note that as a senior, your income and financial circumstances might be different from those of a young person in or near the prime earning years of their life. All or part of your monthly income could be derived from Social Security or investments such as your home or 401k.

If you are looking to file bankruptcy in Florida, contact Lehn Law, P.A., and we may have a senior citizen bankruptcy attorney ready to provide the legal advice and guidance you need in the bankruptcy process. We provide a first free evaluation of your case to establish a solid attorney-client relationship going forward.

Bankruptcy for Seniors

Having to file bankruptcy is difficult to contemplate, particularly if you have worked your whole life and now have nothing to show for it. However, you can be very responsible with money, but if your income is fixed, one large expense could spell financial disaster for most people.

Whether you have been hit with long-term COVID-19 related illnesses, an accident, or unexpected health care costs not covered by Medicaid, bankruptcy may be the only solution to prevent a bad situation from becoming even worse.

Similarly, if you are nearing retirement age or are retired and have to take care of more bills than Social Security or total monthly income could cover, then you can get the relief you need by filing for bankruptcy.

Still, it is critical to note that not every senior who is facing imminent retirement or is retired needs to file bankruptcy.

While retirement income such as Social Security and other retirement accounts are usually exempted from any garnishment intended to repay debts, nonexempt assets such as a paid-off home may be seized by debt collectors when you file for bankruptcy.

The best way to determine a course of action when filing for bankruptcy is to consult a bankruptcy lawyer in your area. You can also find a bankruptcy lawyer through a lawyer referral service that usually has tens and sometimes hundreds of attorney listings.

At Lehn Law, our bankruptcy attorneys evaluate each client’s financial situation and conduct a means test to determine if you are eligible for bankruptcy protection. The good thing about working with us is that we maintain a confidential relationship, and you do not have to worry about your case details getting into the wrong hands.

If you are planning to file bankruptcy, contact the Lehn Law office to discuss the bankruptcy laws in Florida and how they will affect your Medicare, Social Security income, and other retirement accounts that seniors rely on. We may also advise on the type of bankruptcy that would be a good fit for your financial circumstances.

Can Seniors File For Bankruptcy in Florida?


Like any other American, seniors can file for bankruptcy as there is no legal limit for filing.

The concept of a person being too old to file for bankruptcy arises from the erroneous idea that some people in certain phases of life or over a certain age might not benefit much from filing for bankruptcy.

However, seniors tend to be either homeowners or persons who possess significant home equity compared to younger adults. This means that a Chapter 7 bankruptcy for a senior would be radically different from someone in their prime working years.

As such, seniors have a lot more to lose in terms of a paid-off home or in equity if they file for bankruptcy without exemptions for defined benefit plans, IRA, profit sharing, and money purchase plans. Moreover, they are less likely to regain what they lose than a younger person with many prime working years in their future.

However, there is much more to filing bankruptcy for seniors, including understanding the rewards and risks involved. For that, it is crucial to work with a skilled and experienced attorney who will explain the type of bankruptcies, tax-exempt retirement accounts, and the federal law on what can be seized by debt collectors when one files for bankruptcy.

When Should Senior Citizens File Bankruptcy?

The foremost reason one should even consider bankruptcy is when their debts threaten to disrupt or harm their quality of life. If a debt impacts your quality of life or is a source of significant stress, it may be prudent to file for bankruptcy regardless of your age.

Seniors may also opt to file for bankruptcy to wipe out a major credit card and medical debt that may be some of the easiest debts to discharge. You can reduce your stress and enjoy a more peaceful existence in your golden years by filing for bankruptcy.

If you intend to file bankruptcy as a senior citizen, working with a bankruptcy attorney is critical before embarking on the process. If you live in Florida, you should contact the skilled and experienced lawyers at Lehn Law who may be able to provide legal advice on how to file for bankruptcy.

Filing Bankruptcy as a Senior Citizen in Florida


Assuming bankruptcy is the best option for you, you will still have to determine the right type of bankruptcy to file. American citizens can typically file either a Chapter 13 bankruptcy or a Chapter 7 bankruptcy.

A Chapter 7 bankruptcy is usually available to persons whose income falls below the state median income. It is usually referred to as a liquidation event since the debtor will usually have their nonexempt assets liquidated to pay off creditors rather than pay those creditors. In exchange for handing over their non-exempt assets to a bankruptcy trustee for liquidation, they will have their debt discharged.

A Chapter 13 bankruptcy is usually referred to as a reorganization even as, unlike a Chapter 7 bankruptcy, the debtor will not have to liquidate any of their property. Instead, they will have to restructure their debts and make payments lasting between 3-5 years to discharge the debt.

Debt Relief and Bankruptcy Help for Seniors in Sarasota, Florida

In instances where bankruptcy may not be an option, several alternatives can offer a measure of debt relief and get debt collectors off your back. Two of the most popular alternatives for debt relief include debt settlement and debt consolidation.

Debt consolidation is usually achieved via either a debt management plan (DMP) or a new loan.

Working with a licensed credit counseling agency, you can negotiate with creditors to consolidate your debt into a single monthly payment. This enhances the convenience of payments, and since you have third parties negotiating on your behalf, you could get late fees waived and an even lower interest rate.

On the other hand, debt settlement usually has to do with negotiating with each creditor. They have to agree to a significantly less amount than what is owed while making one lump sum payment.

Debt settlement can be an effective way of getting rid of large troublesome creditors, especially if you have non-retirement funds, accounts, or disposable income that is not exempt.

Given how complicated bankruptcy filing can get, we always advise that you contact a skilled Chapter 13 or Chapter 7 bankruptcy attorney. Lehn Law has experienced attorneys who will look at your financial circumstances and determine if bankruptcy is the right course of action.

Tax-Exempt Retirement Accounts: What Seniors Need To Know About Bankruptcy in Florida


Bankruptcy laws are meant to offer relief to people that can no longer afford to pay their creditors. As such, bankruptcy laws limit the amount of assets and property one can keep once they file for bankruptcy.

The limits on what one can and cannot keep are usually referred to as exemptions since the kept assets are exempt from being sold to settle debts owed. Non-exempt assets or an estimated value above the exemption will usually be sold to settle your debts.

Most retirement accounts, including Social Security benefits, Social Security disability checks, most IRA accounts, including 401(k)s, are typically exempted regardless of how much money is in the retirement accounts.

Nonetheless, it is essential to note that the money loses the exemption once withdrawn from those accounts. As such, bankruptcy may not be the best solution for people on Social Security if you have a lot of cash in the bank or outrightly own an expensive home.

However, federal law and most state laws provide a homestead exemption for home equity. The homestead exemption makes it possible for a debtor to keep their home when filing for bankruptcy as long as the equity in the house is not above the homestead exemption.

However, given that most seniors usually have paid off most of their mortgage arrears, it will be hard to exempt all the equity in the home. Moreover, since homes usually increase in value over the years, it is more likely than not that the value will exceed the state’s homestead exemption.

You also have to consider the type of debts you are looking to discharge when filing for bankruptcy. Since senior debt usually encompasses cash advances, credit card debt, car loans, medical bills, personal loans, collections, utility bills, and charge-offs, bankruptcy can effectively discharge such debt.

However, suppose much of your debt is timeshares, unpaid student loans, unpaid taxes, unpaid child support, mortgage arrears, alimony, and home equity loans. In that case, you will not get much benefit from filing bankruptcy.

If you intend to file for Chapter 13 bankruptcy, we at Lehn Law have an experienced Chapter 13 bankruptcy attorney that will provide you with the information and legal advice you need to file. Contact us today to schedule a free consultation, and we may have an attorney ready to answer all your queries.

What Are the Chances of a Senior Citizen Applying for Bankruptcy in Florida?


Whether or not you work with a bankruptcy law firm or consult a bankruptcy attorney, there are several things that you can evaluate on your own to determine if bankruptcy filing would be a good option.

Some aspects to evaluate include your income sources such as part-time employment, pension, and Social Security. Your personal property, real estate assets, and the nature of debt held include mortgages, personal loans, and credit card bills.

The first step is to determine what type of assets could be sold to pay creditors if you file for bankruptcy. If you do not have significant amounts of cash in hand, assets or do not outright own your home, you should do well in a bankruptcy filing.

If you file a Chapter 7 bankruptcy, you will be protected by several exemptions that will protect your property from being sold to pay creditors.

If you are thinking of filing, you should also evaluate your portfolio’s type of assets and property. You should also evaluate the type of income that you depend on to make a living.

Since most senior citizens depend on Social Security income, federal employment, retirement income, pension, and VA benefits, you should be judgment proof if you fall under any of these categories. This means that creditors cannot garnish your income, and in some instances, this will make filing for bankruptcy redundant.

Conversely, you are not necessarily secure just because you collect Social Security as creditors can still place your debts in collections or sue you in court.

As such, bankruptcy may still be a good option even for seniors that are judgment-proof. This is because it discharges all debts and prohibits anyone from attempting to put them in collections by any means.

If you are unsure if you should or should not file bankruptcy, you should contact us at Lehn Law. We have been working on bankruptcy cases for years and have helped many clients with their bankruptcy filings. In addition to filing, we also can negotiate with creditors to provide readjustments or easier repayments plans.

When Is Bankruptcy a Good Idea for Senior Citizens? 


While many seniors continue to work well past retirement age, many more opt to retire and depend on Social Security to survive. Many retired and non-working seniors will often have to deal with financial struggles due to the higher risk for health or medical issues and limited incomes.

By filing for bankruptcy, one can protect their assets and property when faced with mounting debt. Bankruptcy is a tool that can be used at any age, and it is incredibly convenient for seniors who have had the time to invest in a range of assets. 

Many seniors use bankruptcy to protect their family home or other assets from debtors. One can either file for Chapter 7 bankruptcy which offers limited protections or file for Chapter 13 bankruptcy to keep their primary residence while paying off what they owe.

No one is too old to file for bankruptcy, so we always encourage seniors to consult us when they intend to file bankruptcy. Lehn Law has attorneys who understand the different federal and state laws governing bankruptcy. We may be able to get you a favorable solution to the debt challenges you may be facing by offering advice based on your financial circumstances. 

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