Can You File Bankruptcy and Move Into Assisted Living Facilities?

Author: Andrea Miller

Reviewed By: Rachel Rose

You can file for bankruptcy and move into an assisted living facility. Bankruptcy law establishes exempt property that you keep after bankruptcy. Examples include equity in your home, retirement accounts and personal property such as furniture. In the case of bankruptcy, consider paying for assisted living after bankruptcy by selling exempt property.

Can Seniors Get out of Debt by Filing for Bankruptcy?

Seniors can potentially get out of debt by filing for bankruptcy. Chapter 7 bankruptcy discharges eligible debts, which means you’re no longer responsible for payments. Your income and assets must fall below a certain level to file for Chapter 7.

If you don’t qualify for Chapter 7, you can file for Chapter 13. This type of bankruptcy reorganizes your debts. The court decides how much you can afford to repay each month. After you make a certain number of repayments, the bankruptcy judge discharges the rest of your debt. If you file for Chapter 13, make sure to consider the cost of your repayment plan when you budget for assisted living.

Does Bankruptcy Clear Retirement Accounts?

Bankruptcy does not clear retirement accounts. The federal court protects more than $1.5 million of retirement savings held in qualified accounts such as 401(k), 403(b) and IRA plans.

Even if you file for bankruptcy, you keep your retirement accounts up to this limit. If you want to move to assisted living, your investments can help fund the cost.