Do Retirees Need To Go Bankrupt For Debt Relief?
Many of us look forward to our retirement.
The trouble with retiring is that it brings a prolonged period of earning to an end.
When you don’t have an income, but you’re still responsible for outgoings, it can be challenging to stay in the black.
Anyone can experience financial difficulties, and some retirees may find themselves in a situation where bankruptcy offers a solution.
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Should retirees consider bankruptcy?
Bankruptcy may emerge as a solution if you start to amass debts that you can’t pay off.
If your income has plummeted due to taking retirement, and you’re struggling to make ends meet, you might look to options like using credit cards or borrowing money through loans to get by.
If you can pay off a credit card or a loan, this might make financial sense for you.
However, if you’re falling behind, your interest fees are mounting, and you can’t see a way out, it’s wise to tackle the issue as soon as possible.
High-interest credit cards and loans can cause debts to spiral quickly.
If debt collectors and creditors start calling, this can be hugely distressing and unnerving for retirees.
Bankruptcy is a means of eliminating debts, but it is also a way of dealing with debt collection agencies and creditors chasing outstanding payments.
If you file for bankruptcy, you have access to protection, which prevents wage garnishment.
For employees, this is beneficial, but if you’re retired, a creditor wouldn’t have a wage packet to raid.
As it is virtually impossible for creditors to access pensions, in the majority of cases, bankruptcy is not the best course of action for retirees.
Dealing with debt: Advice for retirees
A 2018 survey revealed that 20% of retirees in Canada are paying a mortgage and over 65% have credit card debt.
If you experience difficulties meeting payments, or you’re worried that you’re not going to be able to pay bills in the coming weeks or months, there are steps you can take to deal with debt.
The first thing to do is seek expert help. An experienced advisor will be able to analyse your finances and provide tailored recommendations based on the solutions that will suit you best.
Secondly, you could consider looking at ways to generate money to clear your debts, for example, selling your home and down-sizing.
In addition, it may be wise to explore possibilities such as filing a consumer proposal.
A financial advisor can explain how these options work and help you weigh up the pros and cons.
Bankruptcy is suitable for some people who are finding it tough to pay bills, but for the majority of retirees, there are other options available.
If you need help with clearing debt, or you’re worried about experiencing financial troubles in retirement, we’re here to help.
Contact us now to speak to an advisor.
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