Some Maryland residents dealing with debt lose all the money in their retirement plans, including their 401(k) accounts. However, using retirement savings to pay off debts is often a financial mistake. According to bankruptcy regulations, creditors are not allowed to touch the money invested in 401(k) plans. However, many debtors faced with serious financial obligations do use their 401(k) investments to pay down their debts.
Many people with good intentions end up with undesirable credit ratings. According to the president of the National Association of Consumer Bankruptcy Attorneys, it usually does not do any good to pay down debts with retirement savings. The average American debtor discovers that their debts keep increasing even after paying down loans and credit cards with 401(k) investments. When the debts simply do not go away, it may be wise to consider bankruptcy options.
Statistics show that elderly Americans continue to face financial difficulties resulting in the need to file for bankruptcy. Due to expensive medical bills and fewer pensions being offered to employees, many Americans find that their parents and grandparents were in better financial shape. Those who use the money in their 401(k) plans, traditional IRAs and Roth IRAs in lieu of filing for bankruptcy often find themselves in financial predicaments. They witness their credit scores dwindling away and do not have any savings accounts providing them with emergency funds.
An individual who is living in a desperate financial situation because they lack the funds to pay their rent, mortgage, car loan or medical expenses may wish to speak with a bankruptcy attorney. Filing for Chapter 7 bankruptcy may offer new hope for a debt-free retirement.