Bankruptcy and Preparing for Retirement
If you are in debt and thinking about filing for bankruptcy, you probably have a lot of questions. Older adults generally wonder about how bankruptcy will affect their retirement funds. How is filing before retirement different than after? What about social security? Read on for answers to these and other common questions about bankruptcy and retirement.
What is bankruptcy?
Bankruptcy is a legal process where someone in a lot of debt can cancel or redistribute the money they owe. A bankruptcy lawyer can help with the process. There are several types of bankruptcy, but the most common are chapter 7 and chapter 13.
Chapter 7 bankruptcy, a person’s debt is canceled by the court; this is liquidation. The household income has to fall below a certain level in order to qualify for this type of bankruptcy. Chapter 13 bankruptcy, a new repayment plan is created for existing debt; this is reorganization. Instead of selling assets, the debtor must eventually pay back the money with their regular income. As well as, talk to a bankruptcy attorney to figure out which chapter you should file under.
Can money in a retirement account be claimed by bankruptcy?
Having a 401 (k), or other retirement accounts the cash is safe under chapter 7 bankruptcy
When creating a repayment plan, the amount of money in your retirement account will not be taken into consideration under chapter 13 bankruptcy. The only exception to this is if you have a very large amount saved in an IRA. This may be available to creditors. The current cap is $1,362,800. This amount changes every three years based on the cost of living. The next switch will be on April 1, 2022.
What if I file for bankruptcy after retirement?
Consult with a bankruptcy lawyer for your individual situation.
Looking for a bankruptcy attorney?
If you are considering filing for bankruptcy, you will need a good bankruptcy lawyer to help you. Bartifay Law Offices has been working on bankruptcy and foreclosure cases for 27 years. With experience you need and representation you can trust, Bartifay Law can help you through bankruptcy while paying minimal fees to their office. Feel free to complete our quick response form found on our main webpage. Call (412) 824-4011 to set up a free consultation at one of our eight locations.