Retirement accounts are important tools for retirement planning. One of the biggest myths about bankruptcy is that you will lose everything, including your retirement accounts. In fact, you can keep almost all retirement accounts including your 401k, 403b, pension plans and IRAs when filing either Chapter 7 or Chapter 13 bankruptcy. This is a big relief for bankruptcy filers because they get to hang on to their retirement accounts and at the same time get a fresh start and wipe out their debt.
Many times individuals make the mistake of taking an early withdrawal from their retirement account and then use it to pay debt that would have been discharged in a bankruptcy. Additionally, early withdrawal of retirement funds creates a big IRS penalty and tax liability. Over and over, we see people who have depleted their retirement accounts trying to pay off debt that would have been wiped out in a bankruptcy.
Even thinking about using retirement funds to repay debt is a sure sign of financial trouble. An experienced bankruptcy attorney will be able to review your retirement accounts to make sure they are protected in bankruptcy.
Now that you know almost all retirement accounts are protected, don’t jeopardize your golden years. Take the first step and contact the Law Offices of Mark L. Miller at (619) 574-0551 for a free consultation to discuss planning for your financial future.