' Should You Avoid Bankruptcy? - Law Offices of Robert M. Geller
CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Should I Use My Retirement Savings to Avoid Bankruptcy?

Should You Avoid Bankruptcy And Use Retirement Savings Pasco, St Petersburg, And Tampa Florida.Financial Problems Can Occur at Any Age.

For those who are older and facing financial challenges as they near retirement, the idea of using retirement savings to avoid bankruptcy is likely not something you’d consider.

However, if you’re middle-aged or younger when financial disaster strikes, the money you’ve set aside for retirement could pose a big temptation. After all, you’re decades from retirement, so wouldn’t it be better to use that money to repair your current financial problems?

The simplest answer is “no.”

Retirement savings should never be used to prevent bankruptcy. Even if you haven’t reached the point of considering bankruptcy, it’s still not a smart financial move to pull from retirement savings to deal with unsecured debt.

You’ll Be Penalized for Withdrawing from Retirement Savings Early

Retirement savings is protected from being taxed when it’s saved. Most of the money that you put into traditional retirement savings will not be taxed until you withdraw it.

However, if you withdraw it early, there’s a penalty and the money is taxed as income for that year. You’ll need to report any money you pull out of retirement savings when you file your income tax with the IRS.

You can learn more about how the IRS deals with early retirement savings withdraws here.

You’ll Lose the Benefit of Retirement Savings Protection If You File for Bankruptcy

Retirement savings is also protected when you file for bankruptcy. It’s listed as an exemption, which means it cannot be liquidated to pay your creditors.

A person could have hundreds of thousands of dollars or more in retirement accounts and a trustee will not be able to take it to pay debts because of the exemption.

The only exception to this rule is if someone filing for bankruptcy tries to disguise money in a retirement account. If money is deposited in a larger than normal amount into these accounts within a short period of time before filing for bankruptcy, the trustee could call the deposit into question.

Retirement Savings is Better Left for Retirement

Having solid retirement savings gives you peace of mind later in life, but it’s often something we take for granted when we’re younger. It’s tough to consider decades into the future when you are dealing with an immediate financial strain.

This is one of the reasons it’s so tempting to use retirement funds to deal with a debt crisis. The money is there, it’s yours, and it could help you, in theory. Unfortunately, using it can make your situation much worse – immediately and when you’re nearing retirement.

Before pulling money from your retirement savings to deal with your current debt, consider speaking to an attorney. He or she can help you evaluate your situation and determine whether bankruptcy would be your best option. Regardless whether bankruptcy is ahead for you, it’s important to not make any rash decisions without speaking to a debt expert first.

If you have questions about bankruptcy or you are wondering if using the money you’ve saved might be a good way to deal with a debt problem, we can help. Contact the Law Office of Robert M. Geller at (813)254-5696 to schedule a free consultation.

Archive

Video Testimonials

Tampa Bankruptcy Law Blog

Will Filing Bankruptcy Stop Eviction?

Are you struggling with an eviction notice and don’t know where to turn? You may be wondering if filing for...
Read More

Will Filing Bankruptcy Affect My Social Security Disability?

For those who receive Social Security Disability (SSD) benefits, filing for bankruptcy can be a tricky situation. The goal of...
Read More

Will Bankruptcy Affect My Citizenship Application?

Applying for US citizenship can be a long and complex process. One of the factors that the United States Citizenship...
Read More

What Does It Cost to File Bankruptcy in Florida?

If you are considering filing for bankruptcy in Florida, there is a lot to consider. From understanding what type of...
Read More

Why Should You Consider Bankruptcy in 2023?

With the New Year upon us, it’s important to consider all of your options for getting out of debt. Bankruptcy...
Read More

Can You Keep Bankruptcy a Secret?

Considering bankruptcy is a difficult decision, and it can be a lonely one. You may feel like you’re the only...
Read More

How Will Filing for Bankruptcy Affect My Loved Ones?

Filing for bankruptcy is a serious decision and not one that should be taken lightly. You'll likely wonder will bankruptcy...
Read More

Can I Spend Money If I’m Planning to File for Bankruptcy?

When you’re considering filing for bankruptcy, it can be hard to know the right course of action. One of the...
Read More

What to Do Now If You Intend to File for Bankruptcy Next Year

If you intend to file for bankruptcy in the New Year, there are certain steps you must take to ensure...
Read More

5 Lessons You’ll Learn from Filing for Bankruptcy

Looking for a bankruptcy lesson plan? Here are five things you can learn from filing for bankruptcy. Filing for bankruptcy...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions