Don’t Ruin Your Retirement

by | Apr 8, 2022

Whether or not you choose to file bankruptcy, your retirement accounts are almost always 100% protected from your creditors.  Even if you are sued outside of bankruptcy, in most cases your retirement accounts are still protected.  And – If you choose to file bankruptcy – your retirement accounts are 100% exempt under bankruptcy law.

Looking at the money you may have in your retirement accounts can be tempting: You might be thinking that withdrawing those funds might give you the chance to “catch up” and get out of debt.  Don’t give in!

Is this your situation?

Times are tough. You’ve lost your job, or your business has failed, or you have been too ill to work for an extended length of time.

You look around for resources you might have missed – you don’t want to be broke – you hate being broke – you know you won’t be broke forever.

Maybe if you could just access more assets you could get over this rough period and go back to being successful.

The absolute worst thing you can possibly do at this point is make withdrawals from your retirement account to pay creditors.

Recently I have had many clients who have made this mistake.  They have looked at their personal financial situation, and noticed that they do have some assets left: their retirement accounts.  They withdrew funds from their retirement accounts, paid the state and federal income tax penalties, and paid the rest out to credit card companies and other normal creditors.

They are still broke – but now they may have made it so that they are broke forever.


You may be tempted to use your 401k, IRA, or other retirement accounts to try to get over this current ‘rough patch’. PLEASE don’t do this.

Think of your situation in this way: You have saved the money in your retirement accounts to support you when you are too old to work.  Times might be tough right now, but that doesn’t mean that you should consider using these funds.

If you use these funds to pay your credit card bills, or other bills now – you will not have that money when you are older.  When you’re older you may not be able to work – or you may not be able to work in the same capacity that you can when you are younger.  You

Not having your retirement accounts available for your use in your retirement years will have an enormous impact on your life. Even worse, this impact will come when you have already stopped working, and have a limited ability to recover from your mistakes.

Bankruptcy Is A Better Idea

Because your retirement accounts are 100% protected in bankruptcy, please consider a bankruptcy filing first. Put it this way: Is it better to use your retirement funds to pay your current rent, food, and utility bills? Or do you think it’s a better idea to pay your hard-earned retirement funds to a credit card company? The answer is obvious.

You saved that money for your use when you are no longer able to work – or you have retired from your normal job. Don’t give it to a credit card company.

If you’re feeling desperate – If you’re considering using your retirement accounts to catch up on delinquent debt – PLEASE call me first. Let me help you analyze your situation and help you to understand all of your options.

Save your retirement funds for the purpose they are intended for -RETIREMENT!

Please – give us a call to set up a free consultation and review of your financial situation. We can help!

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Geoff Wiggs