Retirement Accounts and Los Angeles Bankruptcy Filing
Before considering a Chapter 7 Bankruptcy, one of the last assets a person feels forced to liquidate are their Retirement Accounts. Often times, clients will tell me that they figured it was an asset that would be taken anyway, so they might as well use it to either buy more time, or spend a little money as one last splash in the pool of wealth. You would not believe the sadness that overcomes them when they find out virtually all retirement accounts are exempt from Bankruptcy.
These exemptions only really apply to a Chapter 7 Bankruptcy, which is the far more common liquidation scenario whereby a person does not make enough money compared to other Los Angeles residents and wants to wipe their slate clean. If a Chapter 13 Bankruptcy applies, which is often used when one's income is either too high or they have an asset such as a home that would otherwise be liquidated and needs to be protected, the result is that no assets are taken at all as long as you keep up with the mandated payments.
Don't ever liquidate your retirement account to stave off a Bankruptcy. You just might discover after the fact when it is too late that you basically transferred your retirement money to a credit card company, when you could have kept the whole thing and wiped out all of your unsecured debt. There are just too many mistakes the unwary can make and the stakes are high. What is the number one reason for Los Angeles Residents to get a Divorce? - - Money Problems! Talk to a reputable Los Angeles Bankruptcy Lawyer and don't get burned.
