Retirement Funds and Bankruptcy

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Unfortunately, many people have already withdrawn money from their retirement accounts or taken out a 401k loan in an attempt to pay off their debt before meeting with a bankruptcy attorney. Oftentimes, the 401k loan or retirement distribution is not enough to pay off all the debts and with compounding high interest rates the unpaid debts begin to grow again. Even worse, the 401k loans must be paid back and if a distribution was taken then significant income tax consequences generally result unexpectedly. Please read below to understand how this may affect you and speak to a bankruptcy attorney to save your retirement.

Are You About to Withdraw Money from Your Retirement Account or Obtain a 401k Loan?

STOP and speak to us TODAY!!! The money you have saved in your retirement account is 100% exempt by law, which means that creditors cannot garnish or otherwise force you to turnover any funds that are held in a qualified retirement account. If you withdraw retirement funds to help pay your daily living expenses for a few months, then those funds will lose its protection and past due creditors can seek to garnish (take) those funds that you may now have in a bank account. Setting an appointment with us to evaluate your decision can possibly save you thousands of dollars in retirement benefits.

Example to Avoid

Our office met with a client who owed $40,000 in unsecured debt (credit card type debt). Prior to meeting with us, the client withdrew approximately $30,000 from his retirement account over the past 2 years to enable him to afford the monthly minimum payments on these credit cards. At the time of the appointment he had depleted his retirement, and since he could no longer continue to make the monthly minimum payments he now decided to speak to a bankruptcy attorney. Unfortunately, over the past 2 years the client lost his retirement savings, incurred significant tax penalties (approx. $3,000) for early withdrawal of his retirement, and he still owes the $40,000 in unsecured debt because the retirement withdrawals only paid interest and barely reduced the principal balance. If he had met with our office originally, he would have been advised to file the bankruptcy immediately before withdrawing retirement funds, which would have eliminated the unsecured debt completely, prevented any income tax penalties, and he would still have $30,000 in retirement savings at his disposal.

Important Disclaimer: The information discussed above and throughout this website should not be relied upon to make any decisions without first speaking to a bankruptcy attorney. There are many intricate rules of law governing bankruptcy with many exceptions to the general rules that could change the advice given by an attorney based on the differing facts in each person’s special set of circumstances. THEREFORE, it is important to discuss any information contained in this website with one of our attorneys before taking any action or refraining from taking any action.

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Coronavirus: Our Office And Your Safety

Our Offices In Illinois And Missouri: Our offices will continue to remain open to serve all our current
and future clients as we, as attorneys, have sworn an oath to uphold! A Bankruptcy Law Firm, LLC provides
legal and financial services in which Illinois and Missouri have deemed our law offices essential business
activities. Michael J. Benson is committed to ensuring each and every client is being responded to as
immediate as possible, please read below to help our law firm be more efficient so that we may help
EVERYONE with ALL your questions and concerns, especially during these uncertain times.

Precautions: Until the “Stay at Home” Orders have been lifted our offices are functioning 100%.
However, for the safety of you and our employees we are limiting in-office appointments to only those
appointments absolutely necessary, and we are timing appointments so that there will be only ONE client
in the office at any particular time. Therefore, we need your help, patience and understanding to achieve
this goal. We ask our clients to minimize their movements within our offices upon your arrival and to
refrain from using the restrooms at this time. Further, we are disinfecting the waiting area and the office
where your appointment will be held to the best of our ability in between each and every client.
Current Clients: At this time, we are conducting ALL appointments with current clients via telephone
or email communication. Michael J. Benson prefers to give personal attention to each and every client
and to meet his clients personally as much as possible throughout your entire case. However, safety
comes first during this pandemic, and therefore, we will not hold in-office appointments. Further, we
kindly ask clients to not arrive at the office unannounced as this may cause more than one client in the
office at a given time and jeopardize the safety of others—PLEASE respect the safety of others! In regards
to turning in required documentation for your case, please call the office to coordinate.
New Clients: We are still meeting with new clients who have bankruptcy questions now more than ever.
We will meet with you in person and our goal is that you will be the only client in the office at a given
time. If you believe you may have coronavirus symptoms, tested positive for coronavirus or if you are an
at-risk person, then please let our office know and we can schedule a phone consultation so that you can
still receive answers to your questions and concerns.
Phone Calls And Voicemails: Please understand that our office, like every business, is experiencing
an extraordinarily high volume of calls during this time. Again, our office is 100% committed to responding
to our clients as fast as humanly possible. WE NEED YOUR HELP – if you call the office, please leave a clear
voicemail with your name and best contact number and give a precise reason for your call. If you give us
an idea why you are calling, then you will get a quicker answer and it will enable us to be more efficient
so that we can answer more phone calls in the same amount of time so that we can give our clients the
best possible legal care!