Most people imagine their retirement as the prime time of their life. They do not have to spend the day slaving away in an office, nor do they have to worry about their children’s expenses. They can just focus on living their best life.
However, bankruptcy often seems like a threat to that dream, especially as more seniors file for bankruptcy cases. Forbes states that more than 12% of bankruptcy claims in the United States came from adults that are 65 or older. It begs the question of what happens to my retirement?
A bankruptcy breakdown for retirement accounts
Most people can breathe a sigh of relief because bankruptcy doesn’t mean losing your 401(k) or IRA. Actually, pensions, 401(k) accounts and IRAs are exempt from debt collection. It means that debt collectors cannot touch those accounts for unpaid debts.
It’s great news to people who want to maintain their retirement accounts while reducing their debts. However, some people try to be proactive and withdraw money from retirement accounts to pay for bills.
It’s the wrong move because these accounts are exempted from debt collectors anyways. You do not want to want to draw on these accounts and lose the progress you have for your retirement savings.
Also, retirement accounts aren’t the only assets exempted during bankruptcy. Most people keep the majority of their property during the court process.
Instead of losing your savings, consider filing for bankruptcy. It allows you to stop creditor harassment, build a repayment schedule and still maintain your dreams of a comfortable retirement.
