Like most adults, you’ll find that much of your career is spent working to procure funds for your retirement. However, when you end up in debt, you may worry about your future. If you are considering bankruptcy to help alleviate the debts you’ve accumulated, you may be hesitant to file, as you are unsure what could happen to your retirement accounts. If this reflects your circumstances, you’ll want to keep reading, as the following blog explores what you should know about these matters, including the importance of working with Franklin County bankruptcy lawyers to help guide you through this process.
What Happens After Filing for Bankruptcy in Ohio?
When you file for bankruptcy as a consumer in Ohio, it’s critical to understand what you can expect during this process. Essentially, this process occurs when you can no longer repay your debts. As such, you’ll find that you must choose between two different filing options – Chapter 7 or Chapter 13.
Chapter 7 bankruptcy is a liquidation process in which your non-exempt assets are seized and sold to repay creditors. Typically, your trustee will use the funds generated from these sales to repay your creditors. When all eligible assets have been sold, your case will close, and all remaining eligible debts will be discharged. This essentially means you are no longer legally responsible for repaying these debts.
Chapter 13, on the other hand, is vastly different than Chapter 7, as this process includes the reorganization of your debts into one large sum. You will then be placed on a monthly repayment plan, which you will deliver to the trustee assigned to your case. Your trustee will then distribute the payments to your creditors. This payment amount will depend on your disposable income and the amount of debt you have. Additionally, your payment plan will last three or five years, depending on the circumstances of your case.
Will My Retirement Accounts Be Protected During Bankruptcy?
If you are considering filing for bankruptcy, it’s important to understand that your retirement accounts are generally protected when filing. This is because plans covered under the Employee Retirement Income Security Act (ERISA) are protected under the United States Bankruptcy Code. These plans generally include 401(k)s, Profit-Sharing plans, and SIMPLE IRAs. You should note that if you have a traditional or Roth IRA, you’ll find that this is not protected under the ERISA, but you can still see a majority of the funds retained, which typically amount to up to one and a half million dollars, though the exact amount can change as a result of inflation.
As you can see, it’s imperative to understand the importance of working with an experienced bankruptcy attorney to help guide you through his process. At Cousino & Weinzimmer, our firm understands the importance of protecting your retirement accounts, which is why we are committed to helping you through these difficult processes. Connect with us today to learn how we can represent you in these matters.
