It is becoming clear that there is a crisis nationwide and in Arkansas among many persons who are moving into the retirement stage of life without having prepared a sufficient retirement fund and a retirement financial plan. Additionally, it is harder to set up an adequate plan the older one gets because, of course, there is less time available to do it. Further, for those who need debt relief, it may be better to keep a retirement fund financed and eliminate the bills through a debt relief remedy such as bankruptcy.
If one’s unsecured debt is substantial enough to take more than five years to pay off, based on a reasonable and truly affordable payment plan, it would make no sense to ignore one’s retirement years in favor of struggling mightily for years to pay off a bundle of unmanageable unsecured debt. But people are doing it all the time, and ignoring their retirement needs. Many of them are paying diligently to reduce their student loans and massive credit card debt while ignoring their retirement planning.
Qualified 401k and IRA retirement funds, along with other statutorily exempt retirement savings, are exempt from seizure by the bankruptcy trustee. One can keep a retirement fund while going through a bankruptcy and eliminating quickly and forever all unsecured debt, including credit cards, many personal loans and medical bills. That can be a strong way for some persons to clear up their pressing debt problems and keep saving for retirement at the same time.
All that is required is that the individual or married couple must meet the basic requirements for filing a bankruptcy. Most middle class consumers residing in Arkansas will qualify under the current guidelines. The best course to follow is to first obtain a consultation with an experienced consumer bankruptcy attorney. In that way, people can discover what options are actually available and to learn the full impact and ramifications of a bankruptcy filing.
Source: nerdwallet.com, “Save for Retirement, Then Tackle Debt“, Liz Weston, April 8, 2016