In Utah when facing a debt crisis, the decision to use or not to use your retirement account to bail you out of the crisis is an important one. Too often we see prospective bankruptcy clients come into the office who have just recently cashed in their retirement accounts in an attempt help them survive their financial problems only to realize that they are still in a mess even after draining their retirement accounts. The decision to use these funds may prove to be an unfortunate one, especially if the retirement funds only acted as a patch and not a cure for the financial problems.
We see individuals and families who have cashed in all their retirement plans and life insurance policies, and have merely pushed themselves into a do over level just prior to considering filing for bankruptcy. This usually comes from the common misconception that you cannot file for bankruptcy protection if you have money in retirement accounts. The fact, in Utah, most retirement accounts, pension plans, and even life insurance policies are protected from creditors and are not taken in a bankruptcy filing. This means that you don’t have to give up your retirement accounts when you file for chapter 7 or chapter 13 bankruptcy. ERISA qualified retirement accounts such as: 401(k), 403(b), Roth IRA, SEP, SIMPLE IRA, Keoghs, profit-sharing plans, money purchase plans, and defined-benefit plans usually do not impact your ability to file for bankruptcy, and are not taken in a bankruptcy to pay your creditors. In most cases these retirement plans are fully exempted from a bankruptcy filing. If you are in financial trouble and considering using your retirement funds as a temporary patch come in and visit with us – its a free consultation. Call now 801-221-9911.