Will I Lose My Retirement Account If I File For Bankruptcy?

You have worked your whole life to build a nest egg, but despite that money set aside for your future, you are having a difficult time paying your bills now. The debt level has grown to the point where you are no longer able to keep up – but you cannot touch that IRA without significant penalties. Should you take the financial hit and use your retirement money to bring yourself above water? Or should you keep file for bankruptcy and get a fresh start now and leave that retirement money alone so it is there for when you need it later in life?

Retirement Account Exemption Limits Are High Enough That Most Regular Folks Do Not Risk Losing Their Accounts

Section 224 of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 provides for an exemption of IRA and Roth IRA funds. The amount is reviewed every three years and adjusted as needed according to cost of living increases. As of 2013, the maximum bankruptcy exemption amount for IRAs increased to $1,245,475. This is good news for the majority of us, as most Americans do not have IRA balances anywhere near that amount. As long as your IRA is less than the exemption amount, it is fully protected from creditors in the event of a bankruptcy. SIMPLE and SEP IRAs, which are IRA-based employer plan assets, are fully protected in bankruptcy in an unlimited dollar amount.

The Best Way To Prepare For Your Future Financial Well-being Is To Keep Your Retirement Account Intact

If you are whittling away at your retirement accounts to try to pull yourself out of debt, it might be best to take a step back and look at the bigger picture. Filing for bankruptcy does not mean that you are a bad person or that you are a poor money handler. Often, bankruptcies are a necessary tool to free yourself from a financial hole that may have been brought on by such events as unforeseen medical expenses or debts incurred as a result of a job loss. Using that hard-earned retirement just to keep treading water may not be the best option, particularly if it leads you into another financial hole later in life when you are less able to bounce back. You have worked too hard to see everything slip away, and filing for bankruptcy can help you out of a bad situation now without sacrificing your future financial freedom.

Indiana Bankruptcy Attorneys Are Ready To Help You Find Financial Relief

Contact Whitten & Whitten today to find out if a bankruptcy is the best option for you. An experienced bankruptcy attorney will help you take a look at the big picture, something that is often difficult to do when you are in the midst of a financial struggle. We look forward to helping you find the best solution for your individual circumstance and get a fresh start to your financial life. Call us at 219-756-0555 or contact us online to get started today.