Serious financial problems rarely happen when you expect them. Personal injuries or other illnesses that leave you disabled can cause huge medical bills to pile up yet cut off the only source of funds you have to pay off your debts. Sixty-two percent of all bankruptcies filed in 2007 were linked to medical expenses. That is almost 20 percentage points higher than 2001. Unfortunately, the numbers aren’t getting any more encouraging. One would expect these figures to indicate a large amount of uninsured individuals, yet for people filing for bankruptcy in 2007, nearly 80 percent had health insurance. As medical costs rise, this is going to be an increasing issue.
For individuals suddenly stricken with illness or disability, the inability to work is a new experience. Many people who have invested wisely throughout their working careers to build a nest egg for retirement are tempted to liquidate investments in order to pay off pending debts. This doesn’t have to be the case. If your savings are in a 401K or an IRA account, there are ways that these assets can be protected from creditor judgements.
In 2005, the government realized that individuals filing for bankruptcy need to have certain assets available to them in order to move forward after filing. Stemming from this and other realizations, the government changed bankruptcy law. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 protects tax-qualified retirement plans including pensions, profit-sharing, and IRA plans valued at up to $1 million from creditors in the event of a bankruptcy.
IRAs are the largest component of the U.S. retirement market and most investors hold these assets in traditional IRAs, which are funded by rollovers from employee-sponsored retirement plans and other contributions. They often provide easier access to money, have a wider range of investment choices, and may have lower fees. For investments in a 401K, the traditional form of retirement sponsored by employers, creditor protection in bankruptcy is unlimited. When filing for bankruptcy, you simply need to declare your 401K as an asset exempt under the federal or state provisions.
The emotions involved in these decisions can be confusing. It is important to obtain competent legal help that can address these and many other issues that arise in a bankruptcy case. If you are seriously considering bankruptcy and you live in Utah, contact the Utah bankruptcy lawyers at Lincoln Law. Lincoln Law is the nation’s leading bankruptcy law firm and can put an end to the hassle of collection calls, help you keep your home and protect your credit score. For information on how to file a Utah bankruptcy, call Lincoln Law at 800-722-6578 for a free same-day consultation.
Author Resource:-
Brian Reed. Utah BankruptcyIf you live in Utah and you are looking for expert legal advice on Utah bankruptcy and how to go through the process stress-free and error-free, contact Lincoln Law at 800-722-6578.
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