Retirement Plans Are Protected Assets in Bankruptcy
Many people facing overwhelming debt search every available place for money to pay their bills. One of the most common places they look is to their 401k and other retirement accounts. These funds are often mistakenly viewed as readily available money. On the surface, it might seem responsible to use any possible funds to pay your bills. The truth is, you are far better off leaving your retirement funds alone.
At the Law Offices of Patrick M. Culhane in Holbrook, Massachusetts, we understand you want to do the right thing and pay your bills. However, if you are facing unmanageable debt and need financial help, filing bankruptcy — which protects all of your retirement accounts — may be the best option.
Bankruptcy Keeps Your Pension Plan and 401k Account Beyond the Reach of Creditors
When deciding if filing Chapter 7 bankruptcy or Chapter 13 bankruptcy is right for you, be aware that certain retirement accounts are protected by law in bankruptcy. That means that if you file bankruptcy, creditors and your bankruptcy trustee cannot touch your pension plan, 401k or other specific retirement assets.
Before you cash out a retirement account to pay your debts, also consider:
- That money could be considered income under the means test, possibly making you ineligible for Chapter 7 bankruptcy
- If you cash out your accounts early, you will have to pay taxes on that money as well possible early withdrawal penalties
- It does not make sense to give up crucial retirement assets to pay off debts that can be discharged in bankruptcy
- It could delay bankruptcy proceedings
- Your retirement accounts are essential to your future
Before you decide to use your retirement savings to pay your debts, talk to a knowledgeable bankruptcy attorney.
Helping People Get Out of Debt for Ten Years
To learn how we can help you get out of debt while protecting your retirement savings, contact us online or call our office locally at 781-767-7350 or toll free at 888-667-5698 to schedule a confidential free initial consultation with an experienced lawyer.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.
