Bankruptcy and Your Retirement Account

When you see the amounts due on your bills, it is easy to panic about your financial situation. Once you start entering numbers in calculators and spreadsheets, your panic becomes even more entrenched. After doing these calculations, you see how long it will take you to pay off your debts with your current income and how much interest you will pay in the process. This thought is even more depressing when you factor in how few pay periods you have left until you retire, assuming that your health holds up until your anticipated retirement age. You almost feel like clicking on all that entrepreneurship bro content about how you only have so many hours in your life to trade for dollars. Of course, you don’t dare complain about this out loud, because you know that you have it a lot better than many other people do. You have an employer-provided retirement account, and not everyone does. Despite this, creditors are threatening to sue you. Can you file for bankruptcy protection? Yes, you can. And your retirement savings might even be safe from liquidation as a result of the bankruptcy proceedings. If you have a retirement savings account but keep falling farther behind on your debt payments, contact a Florida bankruptcy and retirement lawyer.

Can You File for Bankruptcy If You Have a Retirement Account?

Anyone has the right to file for bankruptcy protection. Billionaires file for bankruptcy, and so do people with zero income, and everything in between. The mere existence of your retirement account does not make you ineligible for court-ordered bankruptcy protection.

Since you have a retirement account and a scary mountain of debt, the question is whether it is better to withdraw money from your retirement account to repay your debts or to try to discharge them in bankruptcy. A bankruptcy lawyer can help you think through how both of these options will affect your long-term financial future and choose the better option for your individual circumstances.

Can the Bankruptcy Court Liquidate Your Retirement Savings?

If you file for chapter 13 bankruptcy, your bankruptcy case can go through without the court liquidating any of your assets. The only way you run the risk of liquidation is if you fail to keep up with the payments on your chapter 13 debt repayment plan. Chapter 7 bankruptcy protection discharges your eligible debts more quickly than chapter 13 does, but it gives the court the right to liquidate your non-exempt assets to settle your debts. Necessities such as the house you live in and the car you drive are exempt, and sometimes retirement savings is exempt, too. 401(k) accounts are always safe from bankruptcy liquidation. IRA accounts are exempt up to a certain balance, but if you have a lot of money in an IRA account, the bankruptcy court can take some of it if you file chapter 7.

Work With a Debt Lawyer About Retirement and Bankruptcy

A South Florida debt lawyer can help you avoid getting your retirement savings liquidated in chapter 7 bankruptcy.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.

Source:

experian.com/blogs/ask-experian/what-happens-to-retirement-accounts-in-bankruptcy/