Bankruptcy and Senior Citizens

Hi there. This is Jonathan Ginsberg, and I’d
like to talk to you today about bankruptcy for seniors. We get a lot
of calls from people, sometimes from the person who’s a senior citizen, sometimes
from an adult child, asking about bankruptcy. Usually what prompts
the call are the harassing phone calls, the collection calls by creditors
to the seniors, demanding money that they don’t have, and, of course,
sometimes these credit card… the collection phone calls can get very, very
aggressive, intrusive demands that post-dated checks be sent, or
demands of access to banking accounts and so forth. It can be very frightening,
and it can be very upsetting to anybody, really, to get these
type of calls, but especially to a senior. A lot of my clients who are seniors have never
had a significant debt problem, never have been in this type of situation.
All of a sudden, just because of either the lack of cost of living
increase or decrease of return on assets, or for whatever reason, they then
find themselves in a situation where they don’t have the money to pay accrued
credit card debt. Some of this can be $50,000, $60,000, $70,000 in credit
card debt, and they’re getting these phone calls. What do they do? So if you’re in that situation, let me kind
of give you some ideas about how I approach it, and, obviously, I’m a bankruptcy
lawyer, although I think that bankruptcy certainly is a last
resort, and sometimes it’s really not necessary. So usually there are two different situations
that I see. The easier one is if you have no assets, and basically you’re
living in a rental place or you have a house, but it’s completely subject
to a mortgage. There’s no equity in the house, you have no other source of
income other than Social Security. In that case, you’re essentially
judgment proof, and basically what that means is that the collection lawyer,
if they turn it over to a lawyer, they can sue you, then get a judgment
against you, they can’t do anything with that judgment, because a civil
judgment for a credit card company cannot go after or cannot attach Social
Security money, and they cannot levy against a bank account that has
only Social Security money in it. They could put a lien on the house, but
that lien doesn’t do any good if they don’t sell the house, and you cannot
foreclose on a $5,000 lien, and you can’t foreclose on a $200,000 house. So if the only situation you’ve got is that
you have no assets, no liquid assets, and all they can do is they can call
you, basically what you can do, and I’ve done this many times, is write
what’s called a drop-dead letter. Basically what that means is I write
the creditor, the collection agency, the credit card company and say, “Look,
my client is a senior. His or her only source of income is Social Security.
The federal law says that you cannot levy on Social Security money,
you cannot levy on a bank account with Social Security money, so there’s really
nothing you can do. You’re not going to get paid. If the situation changes,
my client wins the lottery, we’ll talk, but other than that,
just put this into uncollectable status and write it off.” And, believe it
or not, I’ve had a lot of success with that. I’ve had a number of clients, and
I get a phone call or a letter back saying, “We’ve decided to put this in
uncollectable status,” and never hear from them again. So if you have no assets,
if you’re not liquid at all, we can write this letter, I can write
this letter, and I’d say 80 percent of the time it makes everything kind
of go away. Now, I want to tell you one thing that’s really
important, and that is if you have a bank account and your Social Security
money goes in that, you don’t want to put any other money in that
account, because once it is comingled with other funds, it is subject
to claim by creditors. So what you can do is there’s something called a sub-account.
If you go to your bank, and you say, “Look, I want to put an
account just for my Social Security money,” they can do that at little
or no fee, and then any other money you have in there, that’s at risk, but
if it’s $400 or $500, it’s not that big of a deal. But you don’t want your
Social Security money to be at risk. So if you have no assets, you have nothing
liquid, no equity, nothing that can be easily liquidated, then a drop-dead
letter, in many cases, makes it go away, no need to file bankruptcy. Sometimes
people still do file bankruptcy just to get rid of the phone calls
and put an end to it once and for all, and those bankruptcies are very simple.
They go through very easily without any kind of problems. So if
that’s the situation, that’s an easy situation. A little more difficult situation is one where
I have a client who is asset rich but cash poor, meaning that he or she
may have a paid for house worth $200,000 or $300,000, have Social Security,
may have some fixed investments, some bonds, some interest coming
off CDs, whatever, but nothing that’s really that liquid, and they’re
maybe $20,000, $30,000, $40,000 in credit card debt. In those situations,
bankruptcy is really not going to be appropriate either, because you
can file Chapter Seven, but you’d lose your assets, and that’s not acceptable.
Chapter 13 is not going to work, because there’s no regular income
to fund a Chapter 13 plan. So in those cases, what I tell people to do
is, to the extent that we can write a drop-dead letter, that there’s nothing
liquid, we can do that. Otherwise, I may refer that person to an asset
protection attorney. You’ve got to be very, very careful about transferring
assets out of your name, but there are some situations where you can
create a trust. That’s really not my area of practice, but I can certainly
recommend people, and you want to protect yourself as best you can. Sometimes
we can work on a payment plan, so there are always options. The key with those situations, or if you have
assets but no income, the key is to get to me, get to an attorney early.
Don’t wait until you’re sued, because when it’s early on, when you start
to realize there’s going to be a problem, then you have a little flexibility
to do things, again, create a trust, spendthrift trust, things like that.
But once a lawsuit has been filed, you have very little time, and you
really have very little options as far as what to do. So I would tell you that if you’re a senior,
you’re the caretaker or a loved one of a senior, who’s facing some debt
problems or sees some debt problems coming down the road, pick up the
phone, call me, call another bankruptcy attorney. Let’s talk through the
options so you have an idea of what’s out there, what the possibilities are,
so that you’re not forced to make difficult decisions or give up things
quickly without having time to really plan for it. So that’s how I approach debt situations with
my senior clients, and, again, I’m very sympathetic to the fact that
most of my clients who are senior citizens never in a million years thought
they’d be talking to a bankruptcy lawyer. I’m real sensitive to that
and try to make it as straightforward and painless as possible.
But there are times when talking to a bankruptcy lawyer like me can be very
helpful in obtaining peace of mind, to make life more livable, to live with
some dignity, and there’s no reason to let a bill collector or a collection
lawsuit lawyer make life miserable for you when there are possibly
options. But you won’t know unless you pick up the phone and call me. So hope this has been helpful. Again, my name
is Jonathan Ginsberg. You can reach my office at 770-393-4985, and I’m happy
to help you, answer any questions you may have. Until next time, I’ll
talk to you soon [sounds like].

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