Kansas City Bankruptcy Filing Tip Help: Should I pay off debt with retirement funds?

If you are considering filing for bankruptcy, you should consider the following advice:

You usually should not withdraw or take out a loan against an IRA, 401K, or other retirement account to pay off debt. Missouri and Kansas law protects retirement interest from creditors in bankruptcy. This means that most often you can eliminate or reorganize debt without forfeiting your retirement plan funds. Remember, however, that early withdrawals from these accounts often result in tax liabilities and fees. Also, funds placed in retirement funds within one year of bankruptcy may not be exempt. So as you are filing for bankruptcy, remember these things to protect your retirement assets.

Should I pay off debt with home loans?

You should not borrow money against your home to pay off your debts. Missouri and Kansas homestead exemption laws protect some equity in your home if you file for bankruptcy. Incurring debt against your home can lead to higher payments in the future, increasing your risk of losing your home at a later date. You should consider using debt reorganization (Chapter 13) or bankruptcy debt elimination (Chapter 7). This may allow you to keep equity in your St. Louis home after bankruptcy.

Should I transfer assets to someone else before bankruptcy?

You should not put property you own into another person’s name before filing for bankruptcy. This is considered fraud. It will lead to increased difficulties for you in court. Also, the person to whom the assets were transferred will likely be forced to give up the assets to the trustee. In short, transferring assets will make things worse and will ultimately not protect these assets anyways.

Should I transfer assets to someone else before bankruptcy?

You should not put property you own into another person’s name before filing for bankruptcy. This is considered fraud. It will lead to increased difficulties for you in court. Also, the person to whom the assets were transferred will likely be forced to give up the assets to the trustee. In short, transferring assets will make things worse and will ultimately not protect these assets anyways.