Unfortunately, financial woes know no age limits. If you're a senior citizen struggling to pay your monthly debt payments or feel like you're making little progress towards decreasing your debt load, it may be time to explore filing for bankruptcy.

Bankruptcy filing can give you the financial relief you need to make ends meet. Here's what you need to know about filing for bankruptcy as a senior citizen.

Social Security Benefits Generally Aren't Counted as Income

When considering bankruptcy, one of the first steps that you need to take is determine whether you should file for chapter 7 or chapter 13 bankruptcy. Chapter 7 bankruptcy absolves you of qualifying debts, but you do have to turn over certain assets to repay your creditors.

A chapter 13 bankruptcy is more similar to debt consolidation; you keep all your assets, but you must repay a portion of your debts. There are also income restrictions that impact whether or not you qualify for chapter 7 bankruptcy.

When evaluating your income for a chapter 7 case, you don't have to include your monthly social security benefits. Usually, your social security benefits are also exempt in chapter 13 bankruptcy, but exact treatment can vary with different bankruptcy trustees. Consult a lawyer in your area to see if your benefits will influence your debt repayment.

Know that once your social security payment hits your account, it is designated a cash asset. Make sure that you have proof that your bank balance is from social security; you may prefer to open an account specifically for your socials security payments for simplicity's sake.

Your Home's Equity May be Protected

Some seniors refuse to even consider bankruptcy because they worry that it will cause then to lose their homes. However, the treatment of your home in bankruptcy depends on what type of bankruptcy you file, the amount of equity you have in your home, and your income.

In chapter 13 bankruptcy, since you repay some of your debt, you keep all your assets. There is no risk of losing your home. The amount of your home's equity may influence how much of your debt you have to repay.

Should chapter 7 bankruptcy make better sense for your situation, know that most states permit you to exempt at least a portion of your home's equity. Certain states allow you to exempt all of your equity, while others have a specific figure that states much you can exempt.

Usually, this exemption for home equity doubles if you are married. If your state has a wildcard exemption, you may also use this allowance to exempt the equity you have in your home. 

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