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Senior Citizen Discounts for Bankruptcy Filings – Special Rates and Why You May Need to File

Lawrence & Associates offers a special, discounted rate for some senior citizens who need to file a bankruptcy. In order to qualify, you must receive only Social Security Retirement income in the amount of two thousand dollars ($2,000.00) or less per month. Further, you must be filing a Chapter 7 bankruptcy, and you cannot own any real estate. If you meet these requirements, the attorney fee for your bankruptcy will fall to $500, plus the court’s filing fee. This will cover all of our attorneys’ and paralegals’ work related to the bankruptcy, including all court appearances and document preparation. To the best of our knowledge, no other law office charges this low of a rate, but Lawrence & Associates has decided that seniors deserve special consideration and we created this special program to show our appreciation for our seniors.

How Do Senior Citizens Know Whether They Need to File a Bankruptcy?

Before you contact a bankruptcy attorney, you should sit down and create a budget. List all your income in one column – again, only Social Security Retirement income if you want to qualify for this discount – and all your expenses in another column. Try to be honest with yourself about the actual cost of each expense; remember that wishful thinking has no place in your budget! Make sure your expenses also include monthly payments for any debt that you have. Can you pay your monthly payments while still affording food, rent, and other basic necessities? Will paying your monthly payments allow you some chance of paying off your debt during your lifetime? If you answered no to either of those questions, you may want to call Lawrence & Associates for a free consultation with one of our attorneys.

There are several common reasons seniors file bankruptcy:

  1. Often, as outlined above, social security income is not enough to pay for basic needs and make payments on debt.
  2. Sometimes, credit card payments or payments related to prior efforts to consolidate loans will be deducted from a senior’s bank account automatically, and the senior does not know how to make these deductions stop. This can cause the senior’s debt problems to get worse, especially if the automatic deductions from the bank account cause checks for rent or utilities to bounce.
  3. Creditors – much like scam artists – often take advantage of seniors by calling and harassing them repeatedly throughout the day. A bankruptcy will stop creditor harassment.
  4. Seniors are sometimes sued, threatened with lawsuits, or are afraid they will be sued. These are stressful situations, and a lawsuit (or the threats and letters leading up to a lawsuit) can sometimes go on for years. Many seniors choose to file bankruptcy to avoid adding this kind of stress to their golden years.
  5. Many seniors are concerned with what they will leave to their children, and they don’t want their children to have to deal with inherited debts. Although debts cannot be strictly inherited (more on that below), that doesn’t mean a senior’s children won’t have to deal with them in probate. For this reason, many seniors decide to eliminate the debts now.

One final note: many seniors that meet the criteria for this discount are “judgment proof,” which means the creditor cannot collect on the debt even if they file and win a lawsuit. Being “judgment proof” is very fact specific, but it often applies to people with only social security income and no house, car, or bank account in their names. Please do not assume you are judgment proof until you have spoken to a qualified attorney! Even if you are judgment proof, creditors may still call to harass you and even having a bank account in your name brings risk of garnishment. Thus, even judgment proof seniors often choose to file bankruptcy.

Common Questions Seniors Ask When Filing Bankruptcy

Here are some frequently asked questions – and answers – posed by many seniors when they have a free consultation with our bankruptcy attorneys:

Q: Can Social Security be garnished?

A: Social Security checks can only be garnished if you owe money to the government, such as for back due income taxes. However, if you deposit social security funds in the bank, the bank account can be garnished by court order, and the funds can be lost to a creditor that way.

Q: Can pension checks be garnished?

A: It depends on what kind of pension you have. Any federal benefits – such as a pension received through the Veterans’ Administration – fall under the same rules as social security, above. Most employer pensions offered to employees cannot be garnished, but only if the pension falls under specific rules set forth by the Internal Revenue Service and ERISA’s provisions on federal retirement plans. (If that sounds complicated, it is. This is why many people seek attorney advice before making a decision on filing bankruptcy.) Nearly all pensions for self-employed people do not fall within these protections, and thus can be garnished. Further, similar to social security benefits, as soon as these funds are deposited in the bank, they can be garnished along with anything else in the account!

Q: Is my home in danger?

A: If you don’t own real estate, then probably not. Assuming your rent is always paid on time and you don’t violate any of the rules where you live, most landlords don’t worry about what other debt troubles you have. However, if you own real estate there is a danger that a creditor could get a judgment against you and then put a lien on your home. This is very bad. Judgment liens carry a whopping twelve percent (12%) interest for judgments entered before March 17, 2017, and six percent (6%) interest for judgments entered after March 17, 2017. Further, a judgment creditor can file for foreclosure on your home, just like a mortgage holder can. Finally, a judgment creditor with a lien on your home might be secured rather than unsecured, which means it is harder to get rid of the debt in bankruptcy. For all these reasons, seniors who own homes are not judgment proof, and should consult with an attorney as soon as possible if they are sued over a debt.

Q: Will my children have to pay my debts?

A: Not exactly. A creditor cannot sue your children over your debt. In fact, creditors usually aren’t even supposed to call the debtor’s family members over the debt. However, if you have assets to leave to your children in probate, the creditor can file a lien in the probate case and get paid from your assets before your heirs do. Therefore, it is possible that your debts will have to be paid before your children can receive their inheritance.

Do you have any other questions about filing a bankruptcy? Call Lawrence & Associates and ask for a free consultation with one of our attorneys. We are Working Hard for the Working Class, and we want to help you!