One of the many questions that the clients of our bankruptcy law lawyer in Orange County ask is the safety of their retirement assets. Are they safe in bankruptcy? Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by court order, often initiated by the debtor. Bankrupt is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency.
The good thing is that your retirement assets are protected from your creditors when you file for bankruptcy.
Most of us would likely eliminate retirement contributions when our money is tight. People do this to help them in paying their credit card debts.
But this method of repaying your debt will only make sense in the short run. The IRA will not call you as soon as you stop funding your 401(k).
Reducing your retirement contributions will make you regret it when you need it. When you retire, paying your debt will be more difficult. Thus, it is better to pay it ahead of time so you can stretch your savings.
Learn more about hiring a bankruptcy lawyer in Orange County. Read the full article here.