Many Iowa residents face financial setbacks at some point or another in their lives. Some setbacks are easier than others to bounce back from, but as people get older and their finances are in arrears, it can be difficult to recover. Considering credit card debt, mortgages, medical expenses or divorce, there are a number of ways that seniors can run into financial difficulties. When these debts spiral out of control, filing for Chapter 7 bankruptcy may be just what the person needs to get back in control of his or her finances.
Chapter 7 bankruptcy liquidates some of a person's assets in order to repay creditors. This allows people to reset their finances. However, certain exceptions do exist: student loans, alimony, child support, as well as federal tax bills that are less than three years old cannot be discharged. Moreover, dealing with bankruptcy's stigma often prevents people from filing soon enough. This can hurt people in the long run, especially seniors -- as they continue to spend their retirement assets, they initiate a downward financial spiral that could be more difficult to recover from than a younger person in the same precarious financial situation.