As an Asheville bankruptcy lawyer, I ask clients all the time whether they have any retirement savings. All too often, I hear, “Not anymore.”
North Carolina’s exemption laws, and federal exemption laws, protect money in a retirement account from creditor levies or liens. This is a reason why lawsuits and court proceedings are inefficient for creditors – retirement assets are off limits. In addition, lawsuits usually require filing fees, paying a lawyer, and the potential hassle of proving the debt in Court.
Collectors, however, get paid with retirement funds all the time. How? They convince the owner of those funds to withdraw money or take out a loan against their retirement through their employer in order to make a monthly payment or settle a debt. The debt collector will try irritation, guilt or threats to get you to make a payment. It’s almost never a good idea to deplete your retirement savings to pay on credit card or medical debts.
Ask yourself: is the debt being paid with retirement savings just part of a bigger problem? If so, it is a good idea to speak with a professional about your financial situation. OnTrack Financial is a good resource in Western North Carolina for household budgeting issues. A free, initial bankruptcy consultation with a lawyer is an efficient way to learn about the most efficient way to achieve a financial fresh start. For those of you in WNC, I’d be pleased to speak with you in person.
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