One of the best ways to prepare for personal bankruptcy in New York is to understand what will happen with your assets. Depending on your situation and the unique circumstances that ultimately resulted in filing for bankruptcy, what happens to your assets could look different from another person’s experience.
Retirement benefits are some of the most concerning assets to see withdrawn. Your preparation can help you feel confident about what will happen, as well as provide you with ideas for how you can revive your retirement accounts post-bankruptcy.
401k and IRA
If you have already begun retirement and consistently withdraw money from your IRA, this money does not qualify as part of your IRA. However, the funds still secured in your IRA do qualify and some bankruptcy exemptions do apply. According to The Motley Fool, current law requires that $1,362,800 remain exempt from your bankruptcy proceedings. However, courts could rule to use any remaining funds to help pay off your debts.
Most 401(k)s have protection under bankruptcy. However, this is not always the case. Immediately notify your employer or previous employers of your bankruptcy concerns and they can tell you whether or not your savings qualifies under the Employee Retirement Security Income Act (ERSIA). If qualified, your benefits should remain protected.
Social Security and planning ahead
Under federal law, your Social Security remains untouched during bankruptcy proceedings. However, because some of your retirement savings could face the risk of liquidation, you would benefit from boosting your savings goals right away.
Consider updating your budget and implementing new habits to help you rebuild your retirement benefits. If you need help with organizing your finances and establishing a new savings plan, a financial advisor can provide helpful, customized guidance to meet your needs and lifestyle.