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Is my retirement safe during bankruptcy?

On Behalf of | Dec 17, 2015 | Personal Bankruptcy | 0 comments

Bankruptcy is a tool that many individuals and couples in the area of Louisville, Kentucky, are using to improve a bad financial situation. People find themselves contemplating bankruptcy for a multitude of different reasons, but the brunt of the problem is quite similar—debts have accumulated that are far beyond what a person is capable of managing on his or her own. Bankruptcy is not a punishment and can actually be very beneficial when used correctly.

Naturally, you probably have many questions if you are considering filing for bankruptcy yourself. One of the most common concerns that people have is over specific assets and savings—such as a retirement account or 401(k). You have worked hard to build your retirement and do not want to see your money garnished to pay off extensive debts.

Do not worry: retirement savings and 401(k) plans are protected by exemption rules in the event that you file for bankruptcy. It does not matter if the amount of your total debt is far below the funds in your plan or even if you have not been saving long. Your retirement account has no influence on your bankruptcy actions. In fact, your debts could be completely consolidated without you losing a penny—thanks to exemptions.

You should keep in mind that there are rules that you must follow to ensure the continued protection of the funds that are in your retirement account. You cannot move money from a retirement plan or 401(k) and still have it protected

If you have questions about bankruptcy exemptions, speaking to an experienced attorney could be beneficial.