From time to time, I get calls from someone who is trying to find out if bankruptcy is a good option for their parents. Usually the parent is on a fixed income and the child has been providing financial assistance to help make ends meet. At some point the subject of how the parent is spending his or her money comes up, and the child discovers that the parent has much more credit card debt than he or she will ever be able to payback. Often the parent has stopped making payments, and the parent has become distressed by all of the phone calls the lenders are making to collect the money.
If you are doing research on whether or not bankruptcy is a good idea for a retired or senior parent, here are a few things you should know:
Creditors cannot take your parent’s Social Security benefits. Those benefits are protected. Typically, other retirement benefits such as pensions or proceeds from a 401(k) or IRA are also protected. If your parent owns any real estate, the creditor can attach a lien to the property, which will have to be paid before the property can be sold or refinanced. If your parent doesn’t own any real estate, the most a creditor can do, practically speaking, is harass him or her with constant phone calls. The only way to make a creditor stop those calls (without filing bankruptcy) is by writing the a letter asking them to stop.
If your parent decides bankruptcy is a good option, he or she will have to make an appearance before the trustee who will ask several conditions about your parent’s financial situation. You should discuss this with your parent to see if they are apprehensive about answering such questions and make sure they can follow them. If your parent struggles with answering questions, the stress of the meeting could be more than they can bear. However, an experienced attorney should be able to relieve some of that stress by contacting the trustee beforehand and discussing your parent’s needs.
If you, or someone you know, is wondering if bankruptcy is the right option for them, we hope you’ll come in for a free, no-obligation consultation with an experienced Colorado bankruptcy lawyer. You can schedule an appointment by calling 303.331.3403 or by using our online scheduling system.