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Bankruptcy exemptions and preserving retirement savings

Getting married is scary enough on its own but for older couples dealing with serious medical concerns it can be downright frightening. While the initial concern is clearly the health of the people we love, there are also practical concerns to address. Tennessee readers considering marriage but concerned about how a new partner's financial challenges might their retirement savings or their overall financial situation might find the following comments on bankruptcy exemptions helpful.

Whether a person is filing Chapter 7 bankruptcy or Chapter 13 bankruptcy, federal and state bankruptcy laws allow individuals seeking personal bankruptcy protection the right to claim a number of bankruptcy exemptions. For those unfamiliar with the terminology a bankruptcy exemption refers to property owned by the debtor that is exempt from the bankruptcy estate for purposes of paying back creditors. Although there are a number of exemptions, one of the most well-known involves retirement savings.

In most cases under U.S. bankruptcy law, a person's qualified retirement savings account is exempt from liquidation during bankruptcy, meaning it cannot be used for purposes of paying back creditors. Since retirement savings is often one of the largest items in a person's estate, it can be a considerable item to preserve. This, however, is only one of a number of different bankruptcy exemptions available under state and federal law, depending on how a person chooses to file.

Whenever someone is considering filing for bankruptcy or faces serious financial challenges it is important that they speak with a debt relief professional. Because everyone's financial situation is unique, and there are so many factors to consider, everyone thinking about bankruptcy should obtain an evaluation from a professional before deciding which path is best for them.

Source: Fox Business, "Can Future Hubby's Creditors Filch My Nest Egg?" Liz Weston, April 04, 2014

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Mark T. Young & Associates
2895 Northpoint Blvd.
Hixson, TN 37343

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