Many Baby Boomers Near Retirement, Facing Hard Choices
Throughout his life, Rafael Martinez has worked. He started out in a car wash in 1980, and slowly moved up to a sales job at an herbal tea company, making $85,000 a year, but he was laid off in the Great Recession. Like many baby boomers in his position, he never fully recovered.
A recent study by AARP found that those older than 45 who were laid off as a result of the Great Recession have had a much harder time bouncing back, remaining unemployed for a longer period of time than younger workers, and taking jobs that paid less and offer less hours than what they used to make.
For Mr. Martinez, his unemployment checks and his wife’s income as a Certified Nurse Assistant and caretaker did not quite cover his monthly expenses, and they have had to dip into savings and carry credit card debt. Rafael has been advised to keep working, and to put off retirement until 66.
One bright spot in their financial future is that they will soon own their home, free and clear. Should the couple choose to file for bankruptcy to discharge a medical debt or credit card debt, a Chapter 13 bankruptcy could help them make manageable payments per month. Under current California law, only $175,000 in home equity can be protected from creditors. So, if their home is worth $500,000, for example, they would not actually be able to wipe out their credit card and medical debt. They would, however, be able to consolidate the debt and lower the interest substantially — probably below 1% interest.
On the horizon, a bill (S.B. 308) introduced by State Senator Bob Wieckowski, would increase the homestead amount to $300,000, which would be more likely to fully protect their home from creditors.
Jim Gold and Norma Hammes are Certified Bankruptcy Law Specialists who have helped thousands of people file for bankruptcy. If you have more questions about filing for bankruptcy or the bankruptcy process, please visit our website or contact us for a free and confidential consultation. Norma will meet with you personally, listen to your situation, and advise you of your best possible solutions.
Read the article at LATimes.com