For many, the concept of filing bankruptcy includes losing everything you own, right down to any savings you have for retirement. Nothing could be further from the truth as all retirement accounts and pensions are exempted from the process, as well as many other items. In fact, many people emerge from bankruptcy with almost no loss except for those items that they didn’t want to keep. Declaring insolvency does not have to mean becoming completely indigent and thrown out onto the street with nothing left. In fact, your life experiences very little impact, and almost all of the impacts that do happen can be controlled through the filing. Talk to a Bankruptcy Lawyer in Royal Palm Beach about how this can become a reality for you.
The United States bankruptcy code has specific language that exempts retirement accounts from being considered as an asset. In many cases, accounts such as 401(k)s and IRAs can not be tapped into without incurring a large tax penalty. Pensions can not be accessed until the individual has retired, and even then, the income can not be considered as an asset. The same goes for Social Security and unemployment benefits. The reason for this exemption is the fact that it is unfair to ask the petitioner to take a tax penalty to pay off debt in the case of retirement accounts. Monthly benefits are considered to be the same as receiving a payroll check, and bankruptcy does not affect income whether the individual is working or retired. If you have concerns about your retirement accounts, a Bankruptcy Lawyer in Royal Palm Beach can explain how your assets are handled during insolvency.
When it comes to items you own, you have the right to exempt them as per your state statutes regarding exemptions. These exempted items can not be taken away from you in bankruptcy. The same goes for assets that have a negative value, such as a car that has payments being made on it. Your household items have little to no value as far as the court is concerned, and you can exempt them easily. It’s only in the event that you have an asset that is paid off and has a high dollar value on it is when you need to be concerned. Always consult with a lawyer to learn about how exemptions can work for your specific situation.
