Should You Use Retirement Funds To Repay Delinquent Debts?
Financial hardship can arise without notice. A medical emergency or household mishap can quickly deplete the savings of any hardworking person. In some instances, credit card debt can get out of hand as individuals try to make ends meet. The causes of financial strife are many, and many people look for ways to manage a financial setback. We are all used to using funds in our bank accounts to manage our day-to-day needs.
Many individuals and married couples consider tapping into their retirement accounts to weather a financial storm in the hopes of replacing their hard-earned retirement nest egg when the financial stress has passed. Unfortunately, some people deplete their retirement nest eggs without finding relief from debt. Retirement accounts are generally protected from creditors and in bankruptcy. You do not have to deplete your future security before obtaining a fresh financial start under the Bankruptcy Code.
A Focused Bankruptcy Attorney Can Help You Make Informed Decisions
At The Law Office of Kim Covington in Eugene, I can explain your options for regaining control of your life. Financial strains today should not deprive you of the financial stability you need in your retirement years. Both Oregon and federal law provide strong protections against creditors seizing your retirement funds to pay off outstanding debts. The money you have earned in an Employee Retirement Income Security Act (ERISA)-qualified retirement account, such as your 401(k), is fully protected from the reach of bill collectors and the bankruptcy trustee. Most pension and retirement funds are also unavailable to bill collectors seeking payment of past-due debts.
Understand More About Bankruptcy And Retirement Funds
Taking money from a retirement account will likely lead to unanticipated consequences. Early withdrawal can trigger tax penalties. In addition, once you have taken the money out of the protected account, the money is no longer exempt from creditors. If you are considering borrowing cash from your future to pay for past debts, it may benefit you to speak with a compassionate bankruptcy lawyer to learn what assets are exempt.
I invite you to contact me to arrange a confidential consultation to discuss if bankruptcy is a better option for you. Call 541-393-2790. I have office in Eugene to serve you, with flexible scheduling available. The initial consultation is complimentary.