What happens to my retirement plan in Washington bankruptcy?

Most retirement plans are completely protected in the Washington bankruptcy process. Some kinds of property are regarded as basic necessities and keeping them is important to the goal of giving you a fresh financial start. Retirement plans are seen as this kind of property.

IRAs, 401Ks, pensions and most other formal retirement plans are protected. If you have set up a different kind of account, or have invested in something like real estate for your retirement, you may not be protected. Under some circumstances, it is ok to convert some property from an unprotected asset, such as cash, into a retirement plan but you wouldn’t want to do it in such a way that looks like you are abusing the system or filing a Washington bankruptcy in bad faith. It’s difficult to know what that means so it is a good idea to talk to an attorney about plans like that.

Many people borrow money from retirement plans during the months and years before they file Washington bankruptcy as a way to avoid Washington bankruptcy. If you are paying a retirement plan loan back, you are basically paying yourself back and you can continue to make these payments without affecting your Washington bankruptcy. You can take these payments into account when showing that, after certain expenses, you don’t have the money to pay back the rest of your creditors.

You have probably heard people say that Washington bankruptcy should be the last resort when you are in financial distress. This causes many people to cash out retirement plans in a last ditch effort to pay off debt. Many people find they still have to file Washington bankruptcy after trying this option, which is a shame because they have lost part of their retirement savings that the Washington bankruptcy laws let you keep. If you pay off a family member, that could cause problems for your family because the Washington bankruptcy court could undo that payment and force your family member to turn the money over, which could be gone by the time you file your case.

Before you consider touching your retirement plan, you should talk to an experienced Washington bankruptcy attorney if you are in financial trouble. Our Washington bankruptcy attorneys have years of experience dealing with this issue and can help you get out of debt while preserving as much of they property you and your family need to go forward in life.