by Adrian Lapas, Eastern North Carolina Bankruptcy Attorney
Link to article: http://www.bankruptcylawnetwork.com/preparing-for-bankruptcy/
When you are considering a trip, usually, you make substantial preparations in anticipation of that trip. You make travel arrangements; you make sure you have a place to stay; you make reservations for any activities in which you wish to participate. You will often make significant plans and preparations for any “big” event. Bankruptcy is no different. It is a significant life event that demands some thought and preparation before you embark on it.
In talking with potential bankruptcy clients, it seems that a lot of them wait until the last minute before contacting a bankruptcy lawyer to find out how bankruptcy may help them. While visiting a bankruptcy lawyer most likely does not rank high on most people’s “bucket list,” if you are struggling financially, it most likely makes sense to determine if and how bankruptcy can help you sooner rather than later.
So, how can “preparing” for bankruptcy help? First, you will need to have the fees for the lawyer and for the court available. For now, for a chapter 7 filing, just the filing fee is $306.00. Additionally, before you file, you must complete a consumer credit counseling session and get the certification that must be filed with the court. If you “fail to plan” for your bankruptcy filing by finding out what you need ahead of time, when your car is on the verge of getting repo’d, you may not have the time and/or money to retain a bankruptcy lawyer.
Second, you can carefully go over your income and expenses and see where the trouble lies. Certainly a bankruptcy lawyer can help you identify the problem (with appropriate information) but you also need to know how you got into this financial mess. Some problems are easy to identify–temporary loss of income; extraordinary medical bills; overspending for a bit, etc. Bankruptcy can assist in overcoming those past problems but you need to be aware of the problem so that you can avoid it in the future. Bankruptcy is designed to be a “fresh start.” You can greatly assist in obtaining that “fresh start” by breaking or modifying some of the habits that perhaps got you here in the first place.
Third, make sure you know who you owe and how much. Find out if there is any collateral associated with the debts and gather up loan documents. Your lawyer will need this but, more importantly, you need to know your own financial picture. Credit reports are freely available and can be a big help. Also, if lawsuits or foreclosures have been filed against you, make sure you have that paperwork–all of it! It is important!
Finally, change your mindset. In dealing with individuals facing financial problems, it is often much more difficult instead of dealing with distressed businesses. That is because a business looks at assets and liabilities and can make a rational decision as to whether keeping an asset is worth the corresponding liability. Understandably, people are attached to their “things.” But, after all, they are just “things” and you have to consider carefully whether retaining a “thing” is worth the potential stress and headache. As an example, if you suffered a decrease in income and you have two relatively late model cars. No one wants to give up one or two cars but sometimes it is better to surrender a vehicle or two in order to keep your house (if that is important to you). There will be some emotional attachment to some “things” but it is imperative that you do this. Determining what is important to you is important for your bankruptcy lawyer in setting achievable goals for your bankruptcy filing.
Finally, do some research. There is a lot of information about bankruptcy that is freely available. However, you should exercise extreme caution in considering the information. Not that the information is inaccurate (some info may be outdated or simply inapplicable) but it takes an experienced profession to know what is appropriate and what is not. But, by familiarizing yourself with some basic bankruptcy information, you will be in a better position to appreciate and assist your bankruptcy lawyer in setting realistic and achievable goals.
After all, the real goal of a bankruptcy filing is a “fresh start.”
This blog is updated by the San Diego Bankruptcy Law Firm. The blog is designed to illuminate, update and educate consumers about their bankruptcy rights. Our staff of Bankruptcy Attorneys help consumers file for bankruptcy protection under Chapter 7 and 13 of the Bankruptcy Code. Feel free to contact our Bankruptcy Lawyers for a free consultation at 619-260-1800 or visit us at www.gobksandiego.com
Tuesday, December 20, 2011
Tuesday, December 13, 2011
Unpaid Bills Land Some Debtors Behind Bars
Unpaid Bills Land Some Debtors Behind Bars
by SUSIE AN
Link to article: http://www.npr.org/2011/12/12/143274773/unpaid-bills-land-some-debtors-behind-bars?sc=tw
Although debtors' prisons are illegal across the country, it's becoming increasingly common for people to serve jail time as a result of their debt.
Collection agencies are resorting to some unusually harsh tactics to force people to pay their unpaid debt, some of whom aren't aware that lawsuits have been filed against them by creditors.
Take, for example, what happened to Robin Sanders in Illinois.
She was driving home when an officer pulled her over for having a loud muffler. But instead of sending her off with a warning, the officer arrested Sanders, and she was taken right to jail.
"That's when I found out [that] I had a warrant for failure to appear in Macoupin County. And I didn't know what it was about."
Sanders owed $730 on a medical bill. She says she didn't even know a collection agency had filed a lawsuit against her.
"They say they send out these court notices, and nobody gets them," Sanders says.
She spent four days in jail waiting for her father to raise $500 for her bail. That money was then turned over to the collection agency.
Similar stories have been reported in Indiana, Tennessee and Washington.
Here's how it happens: A company will often sell off its debt to a collection agency, generally called a creditor. That creditor files a lawsuit against the debtor requiring a court appearance. A notice to appear in court is supposed to be given to the debtor. If they fail to show up, a warrant is issued for their arrest.
Beverly Yang, a legal aid attorney with Land of Lincoln Legal Assistance, says most debtors don't know their rights.
In fact, she says, some judges don't even know debtors' rights, which could result in the debtor being intimidated into a pay agreement.
"I've seen this even when I'm standing in the court room as the legal aid attorney," Yang says. "The judge will ask if they can pay, how about $150 a month. How about $75 a month? How come you can't even pay $50 a month? Did you apply for a job last week?"
Leveraging Payments
The Federal Trade Commission received more than 140,000 complaints related to debt collection in 2010. That's nearly 25,000 more than the previous year.
Yang says some creditors are eager to use harsh tactics. "Whatever the creditors or the creditors' attorneys can do to leverage some kind of payment, it will help their profits enormously because they have, literally, millions of these."
Kevin Kelly, president of the Illinois Creditors Bar Association, says members of his organization only issue warrants in extreme situations.
"There's an assumption in what you're saying that we'd rather throw them in jail than work with them," he says. "And I don't find that to be true at all."
Sometimes it's the debtor who's keeping information from the collectors, Kelly says. That prevents important documents from getting to the right place.
He says most collectors want to make reasonable arrangements, but it's difficult when the vast majority don't respond to the notices sent to them.
Illinois Attorney General Lisa Madigan thinks more can be done. It's illegal in Illinois for people to be sent to jail because they're in debt. But Madigan thinks some creditors are abusing the law.
"You wouldn't be in that predicament if you didn't have debt," Madigan says. "But for being in debt, you wouldn't be in prison. And that essentially equates to being thrown in jail, debtors' prison."
She says courts need to be certain they have correct information to serve notices. Madigan also says judges need to be properly educated in these proceedings to prevent a debtor from needlessly going to jail.
The Illinois attorney general also says the state is investigating agencies that it thinks are abusing the law.
As for Sanders, she has a remaining balance of about $160 on her medical bill. But at least she now knows she won't have to go to jail for it.
by SUSIE AN
Link to article: http://www.npr.org/2011/12/12/143274773/unpaid-bills-land-some-debtors-behind-bars?sc=tw
Although debtors' prisons are illegal across the country, it's becoming increasingly common for people to serve jail time as a result of their debt.
Collection agencies are resorting to some unusually harsh tactics to force people to pay their unpaid debt, some of whom aren't aware that lawsuits have been filed against them by creditors.
Take, for example, what happened to Robin Sanders in Illinois.
She was driving home when an officer pulled her over for having a loud muffler. But instead of sending her off with a warning, the officer arrested Sanders, and she was taken right to jail.
"That's when I found out [that] I had a warrant for failure to appear in Macoupin County. And I didn't know what it was about."
Sanders owed $730 on a medical bill. She says she didn't even know a collection agency had filed a lawsuit against her.
"They say they send out these court notices, and nobody gets them," Sanders says.
She spent four days in jail waiting for her father to raise $500 for her bail. That money was then turned over to the collection agency.
Similar stories have been reported in Indiana, Tennessee and Washington.
Here's how it happens: A company will often sell off its debt to a collection agency, generally called a creditor. That creditor files a lawsuit against the debtor requiring a court appearance. A notice to appear in court is supposed to be given to the debtor. If they fail to show up, a warrant is issued for their arrest.
Beverly Yang, a legal aid attorney with Land of Lincoln Legal Assistance, says most debtors don't know their rights.
In fact, she says, some judges don't even know debtors' rights, which could result in the debtor being intimidated into a pay agreement.
"I've seen this even when I'm standing in the court room as the legal aid attorney," Yang says. "The judge will ask if they can pay, how about $150 a month. How about $75 a month? How come you can't even pay $50 a month? Did you apply for a job last week?"
Leveraging Payments
The Federal Trade Commission received more than 140,000 complaints related to debt collection in 2010. That's nearly 25,000 more than the previous year.
Yang says some creditors are eager to use harsh tactics. "Whatever the creditors or the creditors' attorneys can do to leverage some kind of payment, it will help their profits enormously because they have, literally, millions of these."
Kevin Kelly, president of the Illinois Creditors Bar Association, says members of his organization only issue warrants in extreme situations.
"There's an assumption in what you're saying that we'd rather throw them in jail than work with them," he says. "And I don't find that to be true at all."
Sometimes it's the debtor who's keeping information from the collectors, Kelly says. That prevents important documents from getting to the right place.
He says most collectors want to make reasonable arrangements, but it's difficult when the vast majority don't respond to the notices sent to them.
Illinois Attorney General Lisa Madigan thinks more can be done. It's illegal in Illinois for people to be sent to jail because they're in debt. But Madigan thinks some creditors are abusing the law.
"You wouldn't be in that predicament if you didn't have debt," Madigan says. "But for being in debt, you wouldn't be in prison. And that essentially equates to being thrown in jail, debtors' prison."
She says courts need to be certain they have correct information to serve notices. Madigan also says judges need to be properly educated in these proceedings to prevent a debtor from needlessly going to jail.
The Illinois attorney general also says the state is investigating agencies that it thinks are abusing the law.
As for Sanders, she has a remaining balance of about $160 on her medical bill. But at least she now knows she won't have to go to jail for it.
Thursday, December 8, 2011
Bankruptcy is the Best Way to Save Your Home
Bankruptcy is the Best Way to Save Your Home
by Brett Weiss, Maryland Bankruptcy Attorney
Link to article: http://www.bankruptcylawnetwork.com/bankruptcy-is-the-best-way-to-save-your-home/
You want to save your home. Which is the best way to stop a foreclosure, get caught up on your monthly payments, and save your home? Is it loan modification? A workout? Or a bankruptcy?
A recent article, “The Home Ownership Experience of Households in Bankruptcy” by Professor Sarah W. Carroll, of the University of Pennsylvania Law School and Wenli Li, of the Federal Reserve Bank of Philadelphia, provided the first in-depth analysis of the home ownership experience of home owners in Chapter 13. Its conclusions mirror what most bankruptcy attorneys’ personal experience has been: Chapter 13 is one of the most effective ways to let you save your home.
The study followed homeowners who filed for Chapter 13 between 2001 and 2002 in New Castle County, Delaware, from the time of their filing to October 2007. (Since most Chapter 13 plans last five years, this was a fair trial period.) After analyzing the data, it found two important results:
First, the Chapter 13 filing was not always the solution: 27.9 percent of filers lost their houses in foreclosure despite filing for bankruptcy. This is typically a result of poor cashflow. If job loss, or illness continues and there is not enough money coming into the household, the house will be lost regardless of filing bankruptcy or not. Many of the homeowners in this group will end up converting their cases to one under Chapter 7, so that they can wipe out any personal liability for the mortgage(s), as well as most of their other debts.
However, when compared with homeowners who did not file, debtors who filed for bankruptcy were able to stay in their homes for, on average, 27.7 additional months, over two years. This figure includes those who ended up losing their homes.
So, if you’re behind on mortgage payments, consider a Chapter 13–it may let you stay in your home a lot longer than other options.
by Brett Weiss, Maryland Bankruptcy Attorney
Link to article: http://www.bankruptcylawnetwork.com/bankruptcy-is-the-best-way-to-save-your-home/
You want to save your home. Which is the best way to stop a foreclosure, get caught up on your monthly payments, and save your home? Is it loan modification? A workout? Or a bankruptcy?
A recent article, “The Home Ownership Experience of Households in Bankruptcy” by Professor Sarah W. Carroll, of the University of Pennsylvania Law School and Wenli Li, of the Federal Reserve Bank of Philadelphia, provided the first in-depth analysis of the home ownership experience of home owners in Chapter 13. Its conclusions mirror what most bankruptcy attorneys’ personal experience has been: Chapter 13 is one of the most effective ways to let you save your home.
The study followed homeowners who filed for Chapter 13 between 2001 and 2002 in New Castle County, Delaware, from the time of their filing to October 2007. (Since most Chapter 13 plans last five years, this was a fair trial period.) After analyzing the data, it found two important results:
First, the Chapter 13 filing was not always the solution: 27.9 percent of filers lost their houses in foreclosure despite filing for bankruptcy. This is typically a result of poor cashflow. If job loss, or illness continues and there is not enough money coming into the household, the house will be lost regardless of filing bankruptcy or not. Many of the homeowners in this group will end up converting their cases to one under Chapter 7, so that they can wipe out any personal liability for the mortgage(s), as well as most of their other debts.
However, when compared with homeowners who did not file, debtors who filed for bankruptcy were able to stay in their homes for, on average, 27.7 additional months, over two years. This figure includes those who ended up losing their homes.
So, if you’re behind on mortgage payments, consider a Chapter 13–it may let you stay in your home a lot longer than other options.
Tuesday, November 15, 2011
San Diego Bankruptcy Law Firm to Offer Free Bankruptcy Services to San Diego Veterans.
Link: http://news.yahoo.com/san-diego-bankruptcy-law-firm-offer-free-bankruptcy-160845474.html
San Diego Bankruptcy Law Firm to Offer Free Bankruptcy Services to San Diego Veterans.
PRWeb – Wed, Nov 9, 2011...
San Diego Bankruptcy Law Firm is proud to announce that it has agreed to offer free bankruptcy services to San Diego veterans by partnering with Thomas Jefferson School of Law Veterans Legal Assistance Clinic.
San Diego, CA (PRWEB) November 09, 2011
San Diego Bankruptcy Law Firm, located in Mission Valley, is proud to announce that it has agreed to offer bankruptcy services to San Diego Veterans free of charge. San Diego Bankruptcy Law Firm has partnered with Thomas Jefferson School of Law Veterans Legal Assistance Clinic. The Veterans Clinic will pre-screen eligible veterans and refer those who qualify to San Diego Bankruptcy Law Firm.
San Diego Bankruptcy Law Firm was founded by Thomas Jefferson School of Law alumni Todd F. Williams and Scott M. Schlegel and is managed by Maureen A. Enmark. “We were looking for a way to give back to our community and veterans have been particularly affected by the downturn in the economy. This is our way of saying thank you for their service,” says bankruptcy attorney -Todd Williams.
The Veterans Clinic provides limited legal assistance, as well as full service legal representation, to the residents and alumni of Veterans Village of San Diego. Thomas Jefferson School of Law students represent the veterans under supervision of the law school faculty. Veterans Village is a highly successful, residential program that provides housing, substance abuse, mental health, and job training services to formerly homeless veterans.
Bankruptcy can help veterans by stopping foreclosure, eliminating debt and protecting assets. “Sometimes filing bankruptcy is all it takes to provide a little breathing room that will help veterans get back on track,” says bankrupcy lawyer -Scott Schlegel.
The Veterans Clinic will pre-screen potential candidates and refer those who qualify to San Diego Bankruptcy Law Firm. According to Steve Berenson, a professor at Thomas Jefferson School of Law, who runs the Veterans Clinic: “we hit our capacity fairly quickly each semester and have to turn away some cases that we might otherwise be able to handle.”
“This is not the first time San Diego Bankruptcy Law Firm has stepped up to help San Diegans in need,” says Maureen Enmark. When Kerry Steigerwalt’s Pacific Law Center closed its doors, San Diego Bankruptcy Law Firm offered to take over cases and charge the client only the remainder of what they owed to Pacific Law Center.
San Diego Bankruptcy Law Firm is a Better Business Bureau Accredited Business with an A+ rating. They are located in Mission Valley and can be reached at 877-GOBK619 or 619-260-1800. You can also visit their website at http://www.gobksandiego.com
San Diego Bankruptcy Law Firm to Offer Free Bankruptcy Services to San Diego Veterans.
PRWeb – Wed, Nov 9, 2011...
San Diego Bankruptcy Law Firm is proud to announce that it has agreed to offer free bankruptcy services to San Diego veterans by partnering with Thomas Jefferson School of Law Veterans Legal Assistance Clinic.
San Diego, CA (PRWEB) November 09, 2011
San Diego Bankruptcy Law Firm, located in Mission Valley, is proud to announce that it has agreed to offer bankruptcy services to San Diego Veterans free of charge. San Diego Bankruptcy Law Firm has partnered with Thomas Jefferson School of Law Veterans Legal Assistance Clinic. The Veterans Clinic will pre-screen eligible veterans and refer those who qualify to San Diego Bankruptcy Law Firm.
San Diego Bankruptcy Law Firm was founded by Thomas Jefferson School of Law alumni Todd F. Williams and Scott M. Schlegel and is managed by Maureen A. Enmark. “We were looking for a way to give back to our community and veterans have been particularly affected by the downturn in the economy. This is our way of saying thank you for their service,” says bankruptcy attorney -Todd Williams.
The Veterans Clinic provides limited legal assistance, as well as full service legal representation, to the residents and alumni of Veterans Village of San Diego. Thomas Jefferson School of Law students represent the veterans under supervision of the law school faculty. Veterans Village is a highly successful, residential program that provides housing, substance abuse, mental health, and job training services to formerly homeless veterans.
Bankruptcy can help veterans by stopping foreclosure, eliminating debt and protecting assets. “Sometimes filing bankruptcy is all it takes to provide a little breathing room that will help veterans get back on track,” says bankrupcy lawyer -Scott Schlegel.
The Veterans Clinic will pre-screen potential candidates and refer those who qualify to San Diego Bankruptcy Law Firm. According to Steve Berenson, a professor at Thomas Jefferson School of Law, who runs the Veterans Clinic: “we hit our capacity fairly quickly each semester and have to turn away some cases that we might otherwise be able to handle.”
“This is not the first time San Diego Bankruptcy Law Firm has stepped up to help San Diegans in need,” says Maureen Enmark. When Kerry Steigerwalt’s Pacific Law Center closed its doors, San Diego Bankruptcy Law Firm offered to take over cases and charge the client only the remainder of what they owed to Pacific Law Center.
San Diego Bankruptcy Law Firm is a Better Business Bureau Accredited Business with an A+ rating. They are located in Mission Valley and can be reached at 877-GOBK619 or 619-260-1800. You can also visit their website at http://www.gobksandiego.com
Thursday, October 27, 2011
Why Bankruptcy is NOT a Dirty Word
By: Michael Goldstein
Link to article: http://www.jdsupra.com/post/documentViewer.aspx?fid=55bd06ef-ed39-427c-9ca8-747a0e0ea9c4
Unfortunately, in recent years many debt consultation companies, loan modification companies and real estate and mortgage brokers have attempted to mislead the public into thinking that bankruptcy is a dirty word and can end your credit life. These companies are trying to create the propaganda that “bankruptcy” is a word best whispered to yourself in the center of a Middle East war zone. The truth of the matter is that bankruptcy is actually the best course of action when you are struggling with debt and bills you can not handle without some form of assistance.
I am not going to sugar coat bankruptcy because if you are in debt no matter if it is credit card or mortgage issues; it is not a great place to be in. However, bankruptcy law is the Federal sponsored and regulated course of action to help consumers get out of their debt and start their lives again. Unlike bankruptcy, debt consultation companies, loan modification companies and real estate and mortgage brokers are not sponsored or regulated by the Federal Government.
Bankruptcy law is as old as our country. In fact, the concept of bankruptcy was so important to our Founding Fathers that they gave Congress the power to create bankruptcy courts and rules in Article III of the United States Constitution. The drafters did not wait until Article Ten or Twenty but added it as early as Article three in the U.S. Constitution.
If bankruptcy was such a terrible thing to do, the Federal Government would certainly have removed it from the laws and not sponsored it. Congress would certainly not have amended the rules in 1978, or again in 2005 to add more complexities to the Bankruptcy code or Title XI. So, the little dirty word is not
bankruptcy, rather all of the other marketing schemes to get you to spend more money are the dirty parts of the consumer debt business. As a consumer debt attorney, and a founder of a debt relief agency, I would suggest you go right to source to fix your debt with a bankruptcy counsel rather than waste both time and money with companies that are not sponsored by the Federal Government, or that must follow specific rules and regulations to ensure consumers and creditors are treated fairly and equitably.
If you are thinking about entering into a Debt Settlement program you need to be very careful. Based upon what I have seen as a consumer debt advocate over the past ten years, I am personally aware of only a few companies out of the many that advertise debt settlement on the internet that I would trust to try to resolve a debt for my friends and family.
The key to remember in all of this is that if you feel that your debts have spun out of control and you can not catch up with your credit card payments, or mortgage payments, or some other form of debt, your best bet is to set up an appointment and speak with a bankruptcy lawyer today and find out what options are available to you.
Link to article: http://www.jdsupra.com/post/documentViewer.aspx?fid=55bd06ef-ed39-427c-9ca8-747a0e0ea9c4
Unfortunately, in recent years many debt consultation companies, loan modification companies and real estate and mortgage brokers have attempted to mislead the public into thinking that bankruptcy is a dirty word and can end your credit life. These companies are trying to create the propaganda that “bankruptcy” is a word best whispered to yourself in the center of a Middle East war zone. The truth of the matter is that bankruptcy is actually the best course of action when you are struggling with debt and bills you can not handle without some form of assistance.
I am not going to sugar coat bankruptcy because if you are in debt no matter if it is credit card or mortgage issues; it is not a great place to be in. However, bankruptcy law is the Federal sponsored and regulated course of action to help consumers get out of their debt and start their lives again. Unlike bankruptcy, debt consultation companies, loan modification companies and real estate and mortgage brokers are not sponsored or regulated by the Federal Government.
Bankruptcy law is as old as our country. In fact, the concept of bankruptcy was so important to our Founding Fathers that they gave Congress the power to create bankruptcy courts and rules in Article III of the United States Constitution. The drafters did not wait until Article Ten or Twenty but added it as early as Article three in the U.S. Constitution.
If bankruptcy was such a terrible thing to do, the Federal Government would certainly have removed it from the laws and not sponsored it. Congress would certainly not have amended the rules in 1978, or again in 2005 to add more complexities to the Bankruptcy code or Title XI. So, the little dirty word is not
bankruptcy, rather all of the other marketing schemes to get you to spend more money are the dirty parts of the consumer debt business. As a consumer debt attorney, and a founder of a debt relief agency, I would suggest you go right to source to fix your debt with a bankruptcy counsel rather than waste both time and money with companies that are not sponsored by the Federal Government, or that must follow specific rules and regulations to ensure consumers and creditors are treated fairly and equitably.
If you are thinking about entering into a Debt Settlement program you need to be very careful. Based upon what I have seen as a consumer debt advocate over the past ten years, I am personally aware of only a few companies out of the many that advertise debt settlement on the internet that I would trust to try to resolve a debt for my friends and family.
The key to remember in all of this is that if you feel that your debts have spun out of control and you can not catch up with your credit card payments, or mortgage payments, or some other form of debt, your best bet is to set up an appointment and speak with a bankruptcy lawyer today and find out what options are available to you.
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Banks had their bailout. Isn't it time for yours? If you can't get a principal balance reduction or a loan modification, bankruptcy might give you the relief you have been searching for. If you are having trouble with house payments, credit card bills, medical bills, repossessions, or foreclosure, let us help you.
Attorneys Maureen Enmark, Scott Schlegel and Todd Williams will work hard to make sure you understand your options and rights under the law. We want to start helping you today. We have an A+ rating with the Better Business Bureau and take a look on our website for testimonials from satisfied and relieved clients.
Your first appointment is free and completely confidential even if you decide bankruptcy is not the right choice for you. We offer Saturday and evening appointments and free parking at our easy-access Mission Valley location.
Banks had their bailout. Isn't it time for yours? If you can't get a principal balance reduction or a loan modification, bankruptcy might give you the relief you have been searching for. If you are having trouble with house payments, credit card bills, medical bills, repossessions, or foreclosure, let us help you.
Attorneys Maureen Enmark, Scott Schlegel and Todd Williams will work hard to make sure you understand your options and rights under the law. We want to start helping you today. We have an A+ rating with the Better Business Bureau and take a look on our website for testimonials from satisfied and relieved clients.
Your first appointment is free and completely confidential even if you decide bankruptcy is not the right choice for you. We offer Saturday and evening appointments and free parking at our easy-access Mission Valley location.
Friday, October 21, 2011
Don't use your retirement account to pay off creditors
"Keep Your Nest Egg" by Douglas Jacobs
Link to article: http://www.bankruptcylawnetwork.com/keep-your-nest-egg/
Don’t take money out of your retirement account to ease a temporary economic crunch.
Difficult times come and go; and sometimes they seem insurmountable. When that happens, it might appear wise to tap into the 401k or the IRA and borrow or take some of the funds. Don’t do it!
I see bankruptcy clients every day who have used their 401k or their IRA to cover bills. They come to see me after they have reduced or spent all of their retirement! It’s too bad they didn’t see a bankruptcy attorney or competent financial adviser before that money was gone.
Almost all retirement accounts are considered exempt property. That means that even after filing a bankruptcy, you’ll still have it. But your debts, or most of them, will be gone.
Your retirement account is probably the only hope you have for the future. None of us will work forever, and if you deplete the account today, you may well find yourself unable to retire; or not able to afford anything more than a meager existence at that time. And don’t expect the Social Security system to bail you out. At the top rate, the monthly pay-out is barely enough to afford reasonable housing and food, much less travel money to see the grandkids or go fishing.
You should also remember that any money you withdraw from a retirement account gets taxed now. And there’s a 10% penalty for early withdrawals from an IRA. Those taxes won’t go away in the bankruptcy. Not only will you lose an exempt asset you could have kept, but you will incur a new debt too.
So, don’t deplete your retirement. Leave it for when you really need it. See a competent bankruptcy attorney in your state before you make the decision.
Link to article: http://www.bankruptcylawnetwork.com/keep-your-nest-egg/
Don’t take money out of your retirement account to ease a temporary economic crunch.
Difficult times come and go; and sometimes they seem insurmountable. When that happens, it might appear wise to tap into the 401k or the IRA and borrow or take some of the funds. Don’t do it!
I see bankruptcy clients every day who have used their 401k or their IRA to cover bills. They come to see me after they have reduced or spent all of their retirement! It’s too bad they didn’t see a bankruptcy attorney or competent financial adviser before that money was gone.
Almost all retirement accounts are considered exempt property. That means that even after filing a bankruptcy, you’ll still have it. But your debts, or most of them, will be gone.
Your retirement account is probably the only hope you have for the future. None of us will work forever, and if you deplete the account today, you may well find yourself unable to retire; or not able to afford anything more than a meager existence at that time. And don’t expect the Social Security system to bail you out. At the top rate, the monthly pay-out is barely enough to afford reasonable housing and food, much less travel money to see the grandkids or go fishing.
You should also remember that any money you withdraw from a retirement account gets taxed now. And there’s a 10% penalty for early withdrawals from an IRA. Those taxes won’t go away in the bankruptcy. Not only will you lose an exempt asset you could have kept, but you will incur a new debt too.
So, don’t deplete your retirement. Leave it for when you really need it. See a competent bankruptcy attorney in your state before you make the decision.
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