Los Angeles Bankruptcy Law Monitor : Los Angeles Bankruptcy Lawyer & Attorney : Christine Wilton Law Firm : Southern California Chapter 13 & Chapter 7 Bankruptcy, Foreclosure

There is a growing need for those entering their 'golden years' to face the reality of a fixed income that once looked like a hefty savings plan, plus Social Security is now Social Security alone; if you're lucky.  The stock market plummet has cut many Baby Boomer's nest eggs by as much as 50% with no recovery in sight.  Just a couple weeks ago, I read this article, Bankruptcy for Retirees is A Growing Problem where the author recommends that seniors contemplating bankruptcy should see a credit counselor at a non-profit organization to get their finances in order.  What finances?  Why does everyone still think bankruptcy is so bad and should be a last resort?  I'm outraged!

Seniors are facing an even tougher financial crisis at a time when they've been duped by their stock market investments in their 401k plans; Social Security is issuing IOUs; Medicare is just a fraud; and healthcare is up for grabs.  Now, you want them to consult with a credit counselor to get their finances in order before they file bankruptcy?  Absurd.

I say that medical expenses and credit card debt is bad enough without someone saying you should stay saddled with that debt and do all you can to suffer miserably until your death to pay this debt, and your taxes too.  What you really need is to consult with a financial planner and a bankruptcy lawyer to determine the right strategy for you.

There is one warning though; if you're facing additional and ongoing medical treatment, you may consider delaying filing of bankruptcy only because you will not be able to obtain a discharge of your debts but once every eight (8) years.  Otherwise, it's time to permanently discharge your debts once and for all and live with respect, dignity and debt free in retirement.

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Now, I'm no math expert; that's why I went to law school.  The other day, I heard someone mention that they were tired of the medical bills they were receiving and they were just going to pay those medical bills with credit cards.  Unbelievable.  You're of above level intelligence if you're reading this post because you can turn on your computer, log onto the internet and search for information about relevant subjects that interest you; right?  Then, what makes you think that using your credit card, with an interest rate of about 10% or more, to pay off a debt with 0% interest is a good idea?  Am I missing something here?

Too often people are led to the wrong conclusions about money and can't figure out how they got  themselves into the messes they created.  Stop and think about it.  It "feels" good to pay off a debt.  What's missing is that more debt is being created to "feel" good momentarily.  Don't let your emotions get the best of you when making financial decisions.

Another financial mistake would be to pay those medical bills with your retirement accounts; 401k, 403b, IRA, or Roth IRA account.  I don't care how you're saving for retirement, that money is not for medical bills now; it's for your future.  Never, and I emphasize NEVER, touch your retirement accounts until you retire.

Medical bills and credit card debts are always dischargeable in bankruptcy and your retirement accounts are safe from being taken by the trustee to pay those debts.  So, if the Courts can't touch your money to pay your bills, why should you?  

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Today I read an article by Katie Adams entitled, Financial Mistakes that Could Haunt You Forever and it got me thinking.  In this unprecedented Economic Depression, we are faced with more difficult decisions about our finances than ever before.  Who can we turn to?  Who do we trust?  I say that now more than ever before we need radical self reliance.  Don't wait for someone else to tell you what you need to do.  Be informed and then decide the proper course of action for your own financial well being. 

I hear it every day.  "We cashed in our savings and retirement to try to stay afloat."  "We lived off our credit cards and now we can't afford the payments."  These 4 financial mistakes can be fatal in the long run and you may land in bankruptcy:

1. Living beyond your means is so yesterday
2. Cashing out retirement accounts to pay bills is fatal
3. Fear, Shame and Guilt will paralyze you financially
4. Never, Ever Co-Sign on a Loan, unless you intend to own it and can afford the payments!

We're not in a recession, we're in a depression.  We need to adjust our lifestyles accordingly and stop creating debt and live within our means.  Never, Never, and I will say it again, Never cash in your savings or retirement accounts to pay bills because you will lose that compound interest, you'll be penalized for early withdrawal and wind up paying taxes.  It's just not worth it.  Besides, you'll most likely get to keep many of your assets in bankruptcy under an exemption. Lastly, you absolutely must not panic.  Don't let your fear paralyze you into inaction.  The last thing you need is to have your wages garnished by a creditor who has sued you before you decide you need to file for bankruptcy. 

I believe that the most important thing to remember is to never co-sign on a loan for anyone, unless you have the ability to pay for it yourself and intend to own it.  Here's the reason for this.  When you co-sign for the debt of another, you are putting yourself on the hook for that debt, in the event  this other person can no longer pay for it.  If the person you've co-signed for ends up in bankruptcy, then the lender can come after you for that debt.  You may find yourself being thrown under the bus, so to speak, and may end up in bankruptcy too, if you did not intend to pay for that debt. 

Don't go broke before you talk to a bankruptcy lawyer about your current financial circumstances.  Every situation is unique and you may have options outside of bankruptcy, but you must act now.

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