How does filing for bankruptcy affect my retirement benefits?

Filing for bankruptcy in North Carolina can have a significant impact on retirement benefits. Depending on the type of bankruptcy that is filed, either Chapter 7 or Chapter 13, retirement benefits may be at risk. Chapter 7 bankruptcy results in the liquidation of most assets, including retirement benefits such as Social Security, pensions, 401Ks, and IRAs. The court may order these assets to be used to pay off creditors. In Chapter 13 bankruptcy, the court may allow the debtor to keep their retirement benefits. However, the court may order that some of the funds be used to pay creditors over the course of three to five years. This could mean that the debtor will have less money saved for retirement in those years, although some of those payments can be re-instated at the end of the payment period. Another possibility for those filing for bankruptcy is the use of retirement benefits as collateral for a debt consolidation loan. This loan would allow the debtor to make one payment instead of several, and the retirement benefits would serve as the secured loan. No matter what type of bankruptcy is filed, filing for bankruptcy could affect retirement benefits. It is important to speak with a qualified bankruptcy attorney to understand the full implications that filing for bankruptcy may have on a debtor’s retirement benefits before proceeding.

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How does filing for bankruptcy affect my retirement benefits?

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