Will I Be Able To Keep Retirement Account By Filing Bankruptcy in Columbus, Ohio?
The topic of retirement accounts is often very important when determining how to handle financial problems. Bankruptcy clients often ask “will I be able to keep retirements accounts by filing bankruptcy in Columbus, Ohio?”
Retirement Accounts are Protected in Bankruptcy
The decision to drain retirement accounts before talking to a Columbus, Ohio bankruptcy attorney can be an unfortunate one, because many people don’t realize that under Ohio bankruptcy code most retirement accounts are protected through a bankruptcy filing. Therefore, proper planning could have left their retirement acc
ounts in tact through a bankruptcy, while resolving their debt problems.
Most pension plans, retirement accounts, and cash value in life insurance policies are protected from creditors and are not lost in an Ohio bankruptcy filing. What this means is that you can keep your retirement accounts, while dismissing your other debts by filing for chapter 7 or chapter 13 bankruptcy. It is all too common for individuals and families to consider bankruptcy as an absolute last resort, rather than for its true nature, which is consumer protection. Unfortunately, this means that many people don’t have a free consultation with a bankruptcy attorney in Columbus, Ohio until it is too late. This can prove to be a costly mistake as 401(k), 403(b), Roth IRA, SEP, SIMPLE IRA, Keoghs, profit-sharing plans, money purchase plans, and, defined-benefit plans are NOT taken in a bankruptcy to pay creditors. In most cases these ERISA qualified plans are fully exempted from a bankruptcy filing.
Keep Retirement Accounts by Filing Bankruptcy
If it isn’t bad enough that hard earned retirement accounts are no longer available when it is time to retire, additional financial hardships can be created through early utilization of retirement accounts in the form of tax implications and penalties.
For instance: If you take a withdrawal from your qualified retirement account prior to the age of 59 ½, you will be subject to a 10% early withdrawal penalty, so you automatically lose part of your hard earned retirement funding right from the word go. Additionally, you will owe income tax on the money that you take as a withdrawal from the retirement account. Now if this only temporarily patches your financial situation, and you still end up filing bankruptcy eventually, you will have lost your retirement while paying more of your money to the government.
As a bankruptcy attorney office in Columbus, Ohio, we understand that every situation is different, therefore it is in your best interest to schedule a free consultation with The Columbus Bankruptcy Lawyer prior to taking any withdrawal from your retirement plan to manage your debts. The Columbus Bankruptcy Lawyer – Scott Needleman will work directly with you to determine what the best options for your situation are, and if you choose, he can help you to put a plan in place to secure your financial future and help you to keep your retirement.