We live in an economic world where even a small change in the market can affect our finances. The recent drop in the financial markets has caused stocks to fall and bond yields to decrease, making it more difficult for investors to get their money back. When most people think about retirement, they don't consider the impact of falling interest rates, especially on bonds that are not held for a long time. If you are considering retiring but debts are in the way, consider bankruptcy to eliminate debts and free up income.

Eliminate Unsecured Debt

Bankruptcy law allows debtors to eliminate unsecured debts through either Chapter 7 or Chapter 13 bankruptcy. Debtors filing for Chapter 7 bankruptcy are allowed to keep their home and other assets with insignificant equity value, but they must surrender any remaining property to creditors. In contrast, debtors who file for Chapter 13 bankruptcy may be able to keep their home and other assets if they can make regular payments over time toward the debts they owe. However, those who file for Chapter 13 must also continue making payments on certain debts while they are working toward restoring their credit rating and getting back on track financially.

Stop Foreclosure on Your Home

If you're struggling with mortgage payments, filing for bankruptcy may be the only way to avoid losing your home. Chapter 13 bankruptcy allows you to keep your home if you can pay off some of your debt over time. Filing for Chapter 13 bankruptcy stops foreclosure proceedings and gives you time to pay off any remaining mortgage debt through monthly payments made through a court-approved repayment plan. 

Avoid Lawsuits and Collection Actions

If you are being sued by creditors who want to recover money from you, filing for bankruptcy may stop all collection efforts against you. For example, if someone sues you for not paying back a credit card debt and wins a judgment against you, filing for Chapter 7 bankruptcy will wipe out that judgment so that it no longer has any legal force.

Reduce What You Pay on Secured Debt

If you are behind on a car loan or a mortgage and you want to keep these assets, then filing for Chapter 13 bankruptcy (which involves setting up repayment plans) may be a better option than Chapter 7 (which involves liquidating assets). With Chapter 13, any past due payments, when the bankruptcy petition is filed, will be cure through the bankruptcy payment plan as you continue make the regular payments on an ongoing basis. 

Stop Creditor Harassment and Collection Activity

You can stop creditor harassment by filing for bankruptcy protection. Creditors are prohibited from contacting you and must comply with federal law that requires that they stop contacting you (this is call the "automatic stay"). 

Stop Repossession

An important reason to file bankruptcy is to stops a repossession. Normally, if you can't make your payments, then the lender will come after your car or truck and repossess it. Filing a bankruptcy will stop the ability to repossess; however, if you care unable to make ongoing payments, the lender can get bankruptcy court permission to continue the repossession process. If you can afford to make ongoing payments, bankruptcy can be used as a way to cure the default and get you back on track with payments. 

Wipe Out Medical Debt

Medical bills are often the reason people seek relief from debt through bankruptcy. If you have unpaid medical bills, you may be able to discharge them in a chapter 7 case. You must still pay for your current and future care, but the debt from previous treatment is forgiven at the end of your case. You may also be able to discharge credit card debt incurred by paying for medical expenses. Bankruptcy only covers debts incurred up to the filing date of the case. 



Filing bankruptcy is not a decision made on a whim. It can affect your credit and other aspects of your life. However, if you are considering it, you need to know the financial advantages of filing bankruptcy. The economic crisis is affecting retirees in every way. Many wonder how they'll make ends meet because jobs aren't as plentiful as they used to be, and pensions are dwindling in value. This can put significant burdens on families. A free consultation with a bankruptcy lawyer may answer a lot of questions and give guidance on how to proceed into retirement.