As debts become unmanageable and people struggle to afford their necessary living expenses, they are often turning to the only source of funds they have left: their retirement accounts. When you take money from your 401(k) or individual retirement account (IRA) to pay creditors or make up for the negative balance between your income and expenses each month, you are not only hit with large tax penalties, you are depleting important savings that you will need when you reach an age at which you are physically or mentally unable to work. Even after taking money from a retirement account, people are generally unable to pay all creditors in full, and they continue to face collection calls, repossessions, foreclosures, and garnishments. Borrowing funds from your retirement account can also be detrimental as you are then faced with an additional amount being deducted from each paycheck for a loan repayment for years to come. Additional paycheck deductions are the last thing you need when you are already having difficulty making ends meet each month.
People often remove funds from their retirement accounts when their income is otherwise limited due to a period of unemployment or medical leave. While these funds may serve to keep creditors off your back for a short period of time, taking money from your retirement account is not a long term solution. All too often, people deplete their retirement accounts in an attempt to come up with funds to pay a creditor with a garnishment order or foreclosure action, only to realize that there are multiple other creditors waiting in the wing to begin collection actions and file lawsuits. Explore your options through bankruptcy before you empty your retirement account or take that 401(k) loan out and commit to additional paycheck deductions for years to come.
Bankruptcy Courts recognize the importance of retirement savings and provide special exemptions to protect the majority of retirement accounts. Seeking relief through bankruptcy before taking money from your retirement savings allows you to fully exempt and protect the money you will need once you reach retirement age. Contact an experienced bankruptcy attorney before taking money from your 401(k) or IRA to explore your options through bankruptcy. Bankruptcy can provide relief from debt through a Chapter 7 bankruptcy or a manageable repayment plan through a Chapter 13 bankruptcy and allow you to avoid taking money out of your retirement account. In a county in which people are now living to be older than previous generations and the future of governmental programs such as Social Security are uncertain, retirement savings are becoming more and more important.
Make an appointment to speak with one of the experienced bankruptcy attorneys at O’Bryan Law Offices to discuss your options before taking money from your retirement account. Bankruptcy can provide protection for your retirement account and your financial future. Call us today at 502-339-0222 for a free bankruptcy consultation.
