Planning for retirement while considering bankruptcy can raise a lot of questions. For instance, those faced with overwhelming debt may ask if it is best to tap into their retirement savings accounts in order to pay their creditors and avoid bankruptcy. Another question they may have is how declaring bankruptcy will affect their retirement accounts. These are important considerations and those thinking about bankruptcy and their retirement should consider the following:
When people are overwhelmed by their debt, many believe the best course of action is to deplete their savings and to dip into their retirement accounts to pay their creditors. In most cases, using a retirement account to cover debt is not advisable because doing so leaves the borrower without their retirement savings. In many cases, borrowers intend to pay back what they borrowed only to find themselves taking on new debt as they struggle to repay their retirement accounts. In the end, many borrowers find that they are deeper in debt than before they borrowed and are now left without adequate retirement savings.
Reaching the place where you are considering using retirement funds to pay creditors is a sign that it may be time to decide if bankruptcy is a good option for a fresh start. Choosing whether or not to declare bankruptcy involves taking an honest and thorough look at your financial circumstances. There are questions you can ask yourself. For example, are you only able to make the minimum payment on your credit cards? Are you being sued or contacted by unpaid creditors? Are you in a situation where you owe more than you own in assets and cannot see a way out? The answers to these questions may help you determine if looking into bankruptcy is right for you.
Some good news about retirement accounts in bankruptcy is that, in most cases, those individuals who file for bankruptcy protection under Chapters 7 and 13 are permitted to keep the money in their retirement accounts. This may include most IRAs, Roth IRAs, 401(k)s, pension plans, profit sharing plans, stock bonus plans, employee annuities, government deferred compensation plans and certain trusts. As long as the accounts are considered qualified accounts, they may be eligible for exemption from your bankruptcy.
Consulting with an experienced bankruptcy attorney will help you in determining if your retirement accounts qualify for the exemptions available under the law. We have the knowledge and experience you need to help you understand your options. Please contact us online or by phone if we may be of assistance. http://bestmichiganlawyer.com/contact-us