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Hi there, this is Jonathan Ginsberg. I'd like to address a question that I
get sometimes from my clients about what they should do if they have a
401K, a pension, an IRA, or something like that, and they're thinking about
filing bankruptcy. The questions I get either are should I liquidate my
401K or pension and use it to try to pay down some bills, or should I
liquidate it because I'm afraid I'm going to lose it. What should I do? Of
course, the worst are when people have already liquidated and they come in
and say, okay I've already liquidated and gone through everything I own
including my retirement accounts, now I need to file bankruptcy.
Let me make this as clear as I can possibly make it. If you have a pension,
401K, IRA, or any type of qualified retirement plan, it is most likely
going to be considered exempt property in bankruptcy - meaning that nobody
can touch it. So, the last thing you want to do, the absolute last thing
you want to do prior to filing bankruptcy, is to touch, raid, borrow
against, or do anything at all to your 401K, your IRA, or your pension.
Because if you file bankruptcy it's not going to be touched. There's no
reason to mortgage, as it were, your retirement, the money you're going to
have for when you're older or disabled. There's no reason to touch that
when you're thinking about filing bankruptcy.
You can literally file bankruptcy, wipe out a hundred thousand dollars in
debt, restructure your mortgage, restructure your car loan - all the things
that bankruptcy lets you do - and in the meantime have no impact whatsoever
on your retirement plans. So, if you were told otherwise, that's incorrect.
You should not do anything with your retirement money, your pension, 401K,
IRA, or whatever the case may be.
If you hear differently, if you're thinking about filing bankruptcy, if you
have any questions, I urge you to call me. My number is 770-393-4985. Or,
if you don't call me call a bankruptcy lawyer. He'll tell you the same
thing. Don't touch anything. It's not worth it. You're much better off
keeping that money available for when you need it and not using it up to
pay creditors.
Again, when you're filing bankruptcy you've got to look at the economic
impact of it. I realize there are some moral issues that come into play. We
can certainly talk about that. But, that big picture, you're better off I
think in the long run, you and your family, having your retirement money.
So, please don't touch it without talking to a lawyer, and you probably
don't want to touch it at all.
I hope that's been helpful in answering that question. Any more questions,
please call me, or e-mail me, or send me a comment on the blog or wherever
you can get a hold of me. I'm happy to answer those questions for you.
Again, Jonathan Ginsberg here, until next time. I'll talk to you soon.