Senior, Pension Income & Credit Card Debt – Is it a Good idea to go Bankrupt?
Are you wondering whether filing for bankruptcy could be the right choice for you if you are struggling with debt as a senior?
Here’s what you need to consider.
It’s important to understand that debt is not biased.
Unfortunately, anyone regardless of age or income can find themselves dealing with such a high level of debt that they think their only choice is to file for bankruptcy.
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Indeed, debt is quite common in the senior population and for pensioners because the pension often doesn’t completely cover the expenses they have.
When they run low at the end of the month, they will typically start to rely more on their credit cards.
Eventually, this can lead to pensioners realizing they are unable to pay off the amount they owe.
This is when bankruptcy can seem like the only option.
Should You File?
If you are a senior suffering with high levels of debt, you might be wondering whether or not you should file for bankruptcy.
With bankruptcy, you can legally eliminate your debts.
You won’t have to pay them back or worry about debt collections.
However, this doesn’t mean it’s always going to be the right choice.
It depends on your income as well as your assets.
You should make sure that you file before you run through your savings.
Remember RRSPs are exempt except for the contributions you have made over the last 12 months before you file.
What About Creditors?
You might be wondering whether you are ‘creditor proof.’
This is a term used to describe people who are safe from creditors seeking collection of debt that they owe.
It will be the case if you only have credit or bank debts and rent a property without owning any significant assets.
You also need to make sure that you don’t owe money to a bank that you bank with.
If this is the case, then you could potentially do nothing.
However, while wage garnishments are not a possibility, in this case, the collection calls will continue.
You will need to explain that you can’t pay the cost of the debt.
If you do have a part-time job or any income on top of your pension, this income could be garnished.
If that’s the case, then bankruptcy may be the best-case scenario.
Should You Consider Other Assets?
It’s true to say that many seniors do own their own property.
They might even have equity within the home.
If that’s the case, then you might want to complete a consumer proposal rather than filing for bankruptcy.
If you pursue a proposal like this, then you will need to make sure that you can afford the cost on your monthly pension.
You must also meet the requirements of your creditors.
Usually, creditors will allow a consumer proposal if they are going to get more back from this than a bankruptcy.
Do you have more questions about debt relief for seniors?
Contact us today and we will be happy to provide more support.
Alternatively, you can complete a free evaluation on our site and a professional member of our team will get back to you as quickly as possible.
Information on Consumer Proposals
Consumer Proposals in Canada – An Alternative to Bankruptcy
What is a Consumer Proposal?
How to Amend a Consumer Proposal
What are the Benefits of a Consumer Proposal?
What are the Steps in a Proposal?
Consumer Proposal Eligibility
What Debts Are Erased in a Consumer Proposal?
Is There Life After a Proposal?
How to File for Bankruptcy
What is Bankruptcy?
How Does Bankruptcy Work?
What is the Cost of Bankruptcy in Canada?
How to Rebuild Credit Following Bankruptcy
Personal Bankruptcy in Canada
What Debts are Erased in Bankruptcy?