I live in Fl. I got a reverse mortgage and got all of the equity out in one lump sum. The money is all gone now.

2 credit card companies are taking me to court. I did receive notice to appear. I talked to a bankruptcy attorney who told me that any equity from a home is considered non-exempt once you take it out as a loan. It then becomes fair game for any creditor who can get a judgement against you.

My only income is social security and I have a house. I did not transfer or give away any of the proceeds from the home equity. When I spent the money I received from the reverse mortgage, I had no judgements against me. I still do not have any, but I'm sure that I will.

My question is should I file bankruptcy chapter 7 or just deal with the creditors in small claims court? I'm sure they will want to know where the money went, but I feel that it was my money to spend as I wanted to as long as there were no judgements on me.

Any advice would be most helpful. Thanks

If you obtained a reverse mortgage then you no longer own the house. All you have is a life interest in the house, meaning you can live there until death at which point the lender will own the property free and clear. So your debtors cannot attach the property.