Not only do those who are going bankrupt worry about their immediate situation, they are also concerned as to how the bankruptcy is going to affect their future. One of the big concerns is the senior’s pension. While there are Federal bankruptcy rules and regulations, there are also State ones as well. What happens to the pension could be dependent on the State rules. However, in 1999 laws were put in place to protect the pensions in some instances. It stipulated that if the individual going bankrupt was not at the time drawing on their pension then it could not be taken by the bankruptcy trustee. This did not apply to those who were receiving their pension. There were some exceptions in place regarding the undrawn pension.
Case law in 2012 took a different approach and ruled that an individual who claimed bankruptcy and was not drawing on their pension may have to apply their lump sum pension as income, which opened up the doors for the trustee to take it. This now puts those over the age of 55 in a precarious position in regards to their pension and bankruptcy. Each bankruptcy case is different, and one cannot assume that the outcome that transpired in one individual’s case is applicable to everyone else’s.
The bankruptcy laws can be very complex and this is why those who are entering into this form of debt relief whether a pension is an issue or not should utilize the services of a New Albany bankruptcy lawyer.