Should I file bankruptcy or take money out of my retirement account to pay my debts?
There are situations where a person may have a mountain of consumer debts, such as credit card bills, car loans, and medical debt, but could have a significant amount of money in a retirement account such as a 401(k) or IRA. It can be very tempting to dip into that account in order to pay off those debts when creditors are constantly harassing you to pay off the debt.
However, that is usually not a very good idea for a number of reasons. First, there is normally an early withdrawal fee as well as hefty taxes. Secondly, your retirement funds are exempt from garnishment or levy. Thirdly, credit cards and medical debt can be discharged through bankruptcy. Lastly, it does make sense to take a loan from a retirement account, such as a 401(k), in order to pay off debt. If you take a loan, you have to pay it back over a certain period of time. If you are able to make your loan payments, you most likely have the money to pay your creditors directly. Therefore it is not a good idea to take a loan out against your retirement proceeds.
Do Not Misallocate Your Retirement Income To Pay Debts
For certain types of debts, filing bankruptcy makes more sense. Debts, such as credit card debts and medical bills, are unsecured and can be discharged in bankruptcy. Others, however, cannot be discharged in bankruptcy. These include alimony, child support, and student loans (in some instances these debts can be discharged). If your debts are dischargeable in bankruptcy and you are in over your head in debt, bankruptcy can be a great tool to provide you with a fresh financial start. If you choose to file for bankruptcy, your credit will be improved as your creditors will no longer be able to report derogatory information to the various reporting agencies.
Additionally, you can use a secured line of credit to help rebuild your credit score.
The worst thing you can do when you are in over your head in debt is simply do nothing and stop paying the creditors. In some situations your creditors may not be able to take any action against you. This typically applies to individuals with no income or assets. However if you are employed, your creditors could possibly file a lawsuit against you and garnish your wages. Typically up to 25% of your income after mandatory deductions. Creditors can also attempt to collect by seizing any money in your bank accounts or place a lien on your home. Creditors cannot however garnish or levy your retirement accounts. Any 401(k), IRA, or other retirement accounts are exempt from collection.
When deciding to access your retirement accounts there are many options. If you are considering accessing your retirement funds early or confused about how to resolve your debts, call the Atlanta bankruptcy attorneys at Holston & Huntley, LLC at 1-888-513-0004. Our attorneys are experienced and can help find the right solution for you! Call us today to schedule a FREE consultation. We also serve the State of Alabama.
I just wanted to say thank you to the entire company,throughout my entire incident they worked fast and diligently.They always called,texted and or email me to keep me updated.They always showed great gratitude and always kept me informed. Everyone on this team is awesome.I will definitely recommend anyone here for your injury and/or bankruptcy needs.They will make sure you get the respect and the money you need. Thank you and the whole team.
I would highly recommend Holston and Huntley. The staff in the office are very nice. Abena was a big help she is the best!! They are very helpful and get everything done in a timely manner. My experience with the firm was GREAT!
Miss Abena is the best, they are working on my case now ,I just love them always kept it 100000000 and I feel like family
I had an excellent experience with Holston and Huntley. My case/medical expenses were treated with the upmost care and efficiency. I recommend anyone with any type of accident injury to visit Holston and Huntley. Abena Campbell was extremely helpful and made everything convenient and comprehendible about the my case. She was made everything easy as possible. I definitely recommend Ms.Campbell to take of you.
You can count on Buddy and Abena they are awesome. Abena was wonderful, she showed concern for me through my case. Abena walked me through this process like she knew me a long time. I promise you I felt good knowing I was being guided by someone who really cared their staff is awesome. I give them a 10+. Thank you guys, Especially, Abena
My experience with Holston & Huntley attorneys was nothing short of excellent. I worked directly with Abena. She worked hard to get the settlement that I deserved. Continued to stay in contact and keep me updated throughout the long process. Would recommend and work with them again. Thanks Holston & Huntley!
Attorney Huntley and his entire staff was instrumental in getting me everything I deserved. Their patience, kindness, and loyalty to fight for my needs at a critical time proves why they are such a fantastic firm. I would highly recommend them for any of your needs. I personally, will call Mr Huntley if I’m ever in another accident.
I was never anxious despite being in this situation for the first time and all the credit goes to you and your firm because you care and know what you are doing.Thanks.
I don’t usually leave reviews on anything but I thought I needed to share my experience with Holston & Huntley. It was great! Very quick and efficient. Buddy and his staff were awesome. I personally worked with Abena and she was always available to answer any question I had. I highly recommend this firm to anyone who needs a professional lawyer that would fight to get you the best settlement you deserve. I promise you won’t be disappointed!! Thank you, Buddy, Abena and staff for all of your help.
Holston & Huntley entire team was great to work with!!! Thank you so much
- Holston & Huntley LLC @HolstandHuntLLC After an auto accident, every second counts. That’s why we offer a free consultation to discuss your case and provide expert legal advice. Let us help you get the justice you deserve. Contact Holston & Huntley today! #freeconsultation #autoaccident #lawfirm https://t.co/4A82mSk9toHolston & Huntley LLC @HolstandHuntLLC Don’t let insurance companies take advantage of you after an auto accident. We’ll fight for your rights and ensure you receive fair compensation. Trust the experienced attorneys at Holston & Huntley. #legalhelp #autoaccident #lawfirm #holstonandhuntley #mybuddylaw https://t.co/WtMLaTh8pAHolston & Huntley LLC @HolstandHuntLLC At Holston & Huntley, we understand the stress and uncertainty that comes with an auto accident. Let us take care of the legal process while you focus on recovery. Contact us today! #legalrepresentation #autoaccident #lawfirm #holstonandhuntley #mybuddylaw #mylawyerismybuddy https://t.co/eScivgs2sN