Here at Steidl & Steinberg, there’s been a rise in the number of clients who are over 50 years old.
There are many reasons for this. Medical bills. Credit cards. Tax problems. Mortgage default. Co-signing your child’s student loan. Debt has no age limit.
When talking with older clients, I have found they struggled with trying to decide if and when they should talk with us about debt consolidation and bankruptcy help.
Bankruptcy and Retirement
I recently met with a potential client who has worked for his company for over four decades. He is tired and ready to retire. The client has about $30,000 in credit card debt and, on his modest salary, after rent, vehicle expenses, food, insurance, utilities, clothes, and some small items; he has no money left over to pay his credit cards.
It appeared to be a perfect Chapter 7 bankruptcy. His income was far below the median income standards that are used for filing, he owned nothing but an old SUV worth no more than $5,000, and there was no money left over from his income to pay on his cards.
But, he was about to cash in his 401(k) so he could live in retirement. After taxes would come out, he would have more than $60,000 left over. I could protect about $12,000 of this, but there is no doubt that we would have problems protecting the rest.
My client didn’t understand at first.
“This is all I have.” he said.
How Steidl & Steinberg Can Help
I told him I understand his worries and asked him what would happen if, instead of a lump sum, he took monthly payments. The monthly payments would be about $1,200, and I could easily protect them, but protecting the lump sum would be difficult.
There is an argument to be made that the lump sum is traceable to his retirement account and might be protected, but I was not going to risk his money to make a legal point in bankruptcy law that might result in him losing most of his money.
I gave him some advice on how to work with his creditors and possibly settle the debt over a period of time, but trying to settle with them can be challenging. It certainly will cost more money to settle than it would have cost to get rid of the debt completely, as he could have done if he would have come to Steidl & Steinberg six months ago, before he retired. Six months ago he wouldn’t have been cashing in the 401(k), and I could have fully protected his investment in that case.
If you are thinking about retiring, but have concerns about your debt, when should you come and see our bankruptcy lawyers for a free consultation?
How about yesterday?