Posted on: 19 August 2021
Bankruptcy protection is an excellent legal tool to protect your finances and your future. But while you deal with debt issues from your past, it's important not to sacrifice your future and how you're saving for your own retirement. What important things should you do or avoid doing with retirement accounts while seeking bankruptcy relief? Here's what you need to know.
1. Keep Contributing
Many people struggling with debt try to find extra money in their monthly budget any way they can. But one area you shouldn't take away from is your retirement contributions. If you were contributing and have stopped, try to start up contributions at the same rate again. In general, bankruptcy courts don't penalize a debtor for making reasonable retirement contributions.
2. Don't Raid Retirement Funds
Unfortunately, one of the easiest ways that struggling Americans find extra money to stave off foreclosure or bankruptcy is by raiding their retirement plan. If you've done this or are seriously considering doing so, it's a clear sign that you need to turn to bankruptcy protection now.
By taking retirement money, you put your future in jeopardy. And retirement accounts are generally exempt during bankruptcy, so you won't lose this money to debtors unless you take it out too early.
3. Use Qualified Plans
Just because some retirement accounts are protected from bankruptcy seizure doesn't mean all of them are. Nonstandard plans, such as stock option plans, non-tax advantaged accounts, and brokerage accounts, aren't safe from bankruptcy. So you don't want to start or contribute to a plan that may not be protected at this time.
4. Avoid Moving Money Around
Continue to do as you have been doing with your retirement funds, but don't make large and potentially questionable moves. For instance, if you transfer a large amount of money from a regular savings account to a retirement fund, you might think you are protecting it from seizure. However, the court will question this action and may accuse you of bankruptcy fraud.
5. Ask Before Acting
The best way to avoid putting retirement assets in danger is to consult with your bankruptcy attorney before taking any big actions, including withdrawing money, moving it, repaying loans, defaulting on loans, and starting your retirement.
Where to Learn More
Do you have more questions about your particular retirement accounts and bankruptcy options? Find answers to these questions by scheduling a meeting at a bankruptcy law service in your state today. This investment of time will undoubtedly help protect your present and your future.Share