Bankruptcy is an excellent retirement strategy

15 Jan Bankruptcy is an excellent retirement strategy

RetiredBankruptcy is an excellent retirement strategy, especially if you are behind in saving for retirement because your credit card debt is robbing you of your ability to save.

Just look at the math:

Let’s say you’re about 10 years away from retirement, and you owe $25,000 in credit card debt at a typical 18.9% interest. Based upon your budget, you can pay no more than $500 per month toward this debt while maintaining your monthly expenses.

If you pay $500 per month toward the credit card, it will take you 100 months (8 years, 4 months) to pay it off. You’ll pay a total of $50,000, including interest.

Pay that same amount per month into a retirement account with a mediocre net annual return of 7% (after fees), and at the end of 100 months, you’d have about $100,000!

That’s a total wealth swing of nearly $150,000 in 100 months!

There are many interesting and easy to use financial calculators here on the internet, so do your own computations. The results will astound you.

While your repayment strategy seems reasonable, it really isn’t because you’ll end up on the eve of retirement $150,000 poorer that if you filed a bankruptcy today.  That 100 month repayment strategy is a huge commitment because if you quit at any time in the process, you’ll end up with the bad credit you’ve been trying to avoid.  If you file a bankruptcy now, your credit will take an immediate hit, but it will begin to improve immediately as well.

Of course, other factors you should consider are other debt (like medical bills, money judgments, foreclosures and repossessions), your age, health and employability over the coming years.  Really, if you are reading this, you probably have serious concerns about your finances.  Do yourself a favor and take advantage of a free consultation from an experienced bankruptcy lawyer in your area.

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Chip Parker is the managing partner of Parker & DuFresne, P.A., where he represents Northeast Florida businesses and consumers facing bankruptcy, and homeowners facing foreclosure. His firm files more homeowners in the Mortgage Modification Mediation Program than any other law firm in Northeast Florida. Parker is the recipient of Jacksonville Area Legal Aid's prestigious Award for Outstanding Pro Bono Service. Mr. Parker is an active member of the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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