What Are Your Options After Declaring Bankruptcy?

When you've suffered from financial hardship, bankruptcy can offer relief after you've accumulated a significant amount of debt that you cannot repay.

Although bankruptcy may give you hope for the future, it can still cause you to feel limited. It's important to understand your options after declaring bankruptcy to ensure you can regain control of your finances.

Begin Saving Money

Start saving money in an emergency fund that you can use on a rainy day when you need car repairs or have an unexpected hospital visit. 

The money you save can give you the necessary funds and help you avoid going back into debt. Building a budget will also allow you to determine how to spend each dollar that you own and can avoid overspending.

Hire a Legal Professional

Hire a bankruptcy attorney to navigate the legal process after you file for bankruptcy to avoid mistakes that can affect your future. A legal professional will review the details of your situation and can determine the best chapter to file, depending on the amount of money you owe. 

They will also deal with the creditors that continue to contact you, which can allow you to avoid excess stress and avoid receiving more phone calls in the future.

Build Your Credit

Rebuilding your credit is necessary to increase your borrowing power when you want to purchase a vehicle, home, or open a credit card in the future. 

Increasing your credit score is possible by disputing any discharged debt that isn't accurate on your credit report. You can also pay off new balances on credit cards and monitor your credit report online each month.

Create Financial Goals

Creating financial goals can allow you to improve your financial standing and learn from your past mistakes. It also gives you a realistic timeline for how long it will take to rebuild your financials, such as credit history, wealth, and debt. 

You may want to save enough money for a down payment on a house or go back to school, making it necessary to consider where you want to be in the coming years to ensure you remain motivated and avoid making mistakes with managing your money.

Once you learn about the options available after you declare bankruptcy, it can be easier to discover the right path to take and recover. 

Obtaining assistance from an expert can make it easier to know the correct steps to take and avoid staying in a poor financial situation.

4 Things Seniors Should Know About Declaring Bankruptcy After You Retire

You are sure of certain things in your working life: growing older and accumulating all your savings in the bank. Many seniors desire to reach their retirement age with enough savings in their accounts to sustain a comfortable life. 

However, that is not the case for those who retire with debts. Faced with increased healthcare costs, decreasing pensions, low income, and high tax rates, seniors have to rely on what they have in the bank and social security. 

When there is an imbalance in their savings and debts, they opt to file for bankruptcy. While the procedure helps relieve them of some cash straps, there are other concerns to consider.

Chapter

There are two key consumer bankruptcy protection types: Chapter 7 and Chapter 13. When you file bankruptcy with Chapter 7, you don’t have to deal with a debt repayment plan. 

Instead, all of your assets are liquidated and used to pay off as much of your debt as possible. If the value of your assets doesn’t cover the entirety of your debt, the remainder is dismissed. 

When you file bankruptcy with Chapter 13, you retain all your assets but commit yourself to repay your creditors a certain amount of money in a period of three to five years. The courts will decide on a payment plan for you.




When you file, you get to choose which type of bankruptcy to choose. However, there are some limitations to this. There is a means test to decide if you qualify for Chapter 7 bankruptcy. If your income is too great, you will be required to file for Chapter 13 instead.

Assets and Exemptions

Seniors should weigh the effect of declaring bankruptcy on their assets. All states have particular laws governing what is exempted during a bankruptcy case. 

Depending on where you reside, you can substitute federal exemption guidelines. Some of the assets that would likely be exempted in your case include a vehicle, home equity, clothing, and work-related equipment. 

Each exemption is associated with a certain amount of dollars. Homeowner retirees should pay attention to their state rules on homestead exemptions. Several states allow you to exempt a certain amount of money for your home value, while other states let you exempt any amount.

Retirement Income

As mentioned earlier, if you don’t qualify for Chapter 7 bankruptcy, you will have to file for Chapter 13 bankruptcy instead. However, one thing to keep in mind when doing the means test is that your social security compensation is not considered income, which can make it easier for seniors to qualify for Chapter 7. 

Additionally, pensions, 401k plans, annuities, and a certain part of a traditional or Roth IRA plan will all be exempted.

If you’re not sure whether bankruptcy is right for you or which type of bankruptcy you should file for, talk to a bankruptcy attorney. They can give you advice about what would best fit your specific situation. They can also help you in filing and working with the courts.

Filing for bankruptcy in your retirement is beneficial if you have substantial debt and do not have enough income to cover it. Contact a bankruptcy attorney for more information. The attorney will explain the legal process of filing for retirement bankruptcy and how to avoid penalties.