For the majority of your adult life, you’ve worked to build your savings and provide for your family. However, as you get older, your priorities will shift to planning your retirement. However, when you fall into debt, these priorities can drastically shift, leaving you with few options to rectify your financial circumstances. One option you may consider is bankruptcy. However, you may be concerned about the impact this can have on your Social Security benefits. If this reflects your circumstances, you’ll want to keep reading to learn whether or not these assets are at risk and the importance of working with a Memphis, TN consumer bankruptcy lawyer to discuss your options to help you regain control of your finances.
Will My Social Security Benefits Be Protected During Bankruptcy?
In the vast majority of instances, your Social Security benefits will be protected if you choose to file for bankruptcy in Memphis. This is because Tennessee and the federal government allow filers to claim an exemption on these assets. As such, these funds cannot be used to repay creditors. However, you should note that in some instances, like failure to adhere to child support or alimony orders, your benefits can be taken to satisfy these debts.
However, if you have mixed your Social Security benefits with other assets, it can be harder to protect. This is because you will likely have a more difficult time proving that the assets came from Social Security as opposed to other means. If you cannot successfully prove that these funds should be exempt, they can be seized and used to pay creditors.
To avoid having your assets comingled, you should create a separate account solely for your Social Security funds. As such, your direct deposits or checks can go directly into this account, away from your other funds, to ensure these are protected.
Are My Other Retirement Accounts Protected?
It’s important to understand that, generally, your retirement accounts are protected in the event you file for bankruptcy. This is because plans covered under the Employee Retirement Income Security Act (ERISA) are protected when filing. Plans covered under this act include 401(k)s, 403(b)s, profit-sharing plans, and IRAs. However, if the assets in these accounts exceed the exemption amount, a portion can be taken.
Additionally, assets are only protected while they remain in the retirement account. If you remove funds, they are no longer granted protection under bankruptcy exemptions.
When you are ready to file for bankruptcy, it’s critical to understand the importance of working with an experienced attorney during this process. Unfortunately, this is an incredibly tedious process that can take a considerable amount of time to navigate, and you risk making errors that can completely invalidate your filing. At the Arnold Law Firm, our dedicated legal team will do everything in our power to help you recover the compensation that you are entitled to. When you need assistance, contact us today to learn how we can assist you.
