Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Are my 401k and IRA protected in bankruptcy?”
If you are considering filing for bankruptcy it is important to understand exactly what you are getting yourself into. For example, you should spend some time reading up on what kinds of assets are considered exempt under bankruptcy laws and what kinds of debts may not be dischargeable. Those with retirement savings might be pleased to discover that under current laws, the vast majority of retirement accounts are considered exempt property.
In 2005, Congress passed a major overhaul to the bankruptcy system. Under the new federal laws, nearly all retirement accounts are now considered exempt, meaning that creditors will not be able to access that money if you file for bankruptcy. The rules apply across the board, to both Chapter 7 and Chapter 13 filings.
The law says that plans such as 401(k)s, 403(b)s, IRAs, SEPs and profit-sharing plans are all exempt from creditors. This means that retirement accounts that you pay into as well as pension plans paid for by your employer can all be shielded in the event of a bankruptcy filing.
The first exception to the above rule is that if the creditor that you are attempting to avoid is a government entity, likely the IRS, then no retirement accounts are protected. Though the IRS may not directly liquidate the retirement funds, it is able and willing to seize any distributions you try and take from the accounts.
Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Can I get credit after filing personal bankruptcy?”
A recent survey by the organization YouGov attempted to explore Americans’ feelings regarding bankruptcy and it uncovered some interesting information. The first detail that many might find surprising is that 18 percent of those surveyed (a sample designed to reflect the public at large) say they have either filed for bankruptcy already or a member of their household has done so.
Beyond the 18 percent who say they’ve personally experienced bankruptcy, another 23 percent say they have considered filing for bankruptcy. The numbers show just how broadly economic trouble can impact American families and how many people think bankruptcy might be a way out of their financial mess.
Though many people have considered filing for bankruptcy, the survey found that those earning less than $40,000 per year are more likely than other groups to seriously debate filing. Among this income bracket, more than 30 percent of respondents say that they have considered filing for bankruptcy.
The survey also discovered that though many people may be entertaining the idea of filing for bankruptcy, very few actually understand how the process works and what it is designed to achieve. YouGov asked respondents which kinds of debt could be discharged in Chapter 7 bankruptcies. Only 28 percent of those who responded realized that alimony debt could not be discharged in a Chapter 7 bankruptcy while only 37 percent knew that child support debt was non-dischargeable. Similarly few people understood that taxes and student loan payments could not be discharged.
Charlotte Bankruptcy attorney Bryan W. Stone answers the question: “Can I keep my car if I file bankruptcy?”
For those who have experienced serious financial hardships it is possible you have encountered payday lenders. These payday loans might appear to offer a quick way to get money, but the insanely high interest rates many charge can quickly spiral out of control and lead to a bottomless pit of debt. Though the payday loans might seem to offer help for those behind on bills, they almost always succeed in making an already bad situation much worse.
Those who feel trapped by payday loans likely have wondered whether the loans are dischargeable in a North Carolina bankruptcy. The good news is that payday loans are totally dischargeable under the federal bankruptcy code. The reason is that under classifications contained in the bankruptcy code, payday loans almost always qualify as non-priority unsecured debts.
This category includes things like credit cards, medical debt, personal loans and other debts that were received by individuals without the use of collateral. Payday loans, like all other types of non-priority unsecured debts, are totally dischargeable in both Chapter 7 and Chapter 13 bankruptcies.
Though the debt is dischargeable in bankruptcy there are several special concerns that arise when dealing with payday loans. The first issue that can occur is that payday lenders have been known to object to discharges of debt that occurred less than 90 days before a person filed for bankruptcy. These creditors argue that the loans were taken out without any intention of paying them back, something that can result in debts not being discharged as part of the usual bankruptcy process.