To Our Clients & Prospective Clients -- As of March 18, 2020, Starr & Starr, PLLC remains open for business during the current Corona virus (COVID-19) crisis. We remain in communications with our clients by phone, email and our secure file share site. We are scheduling telephone consultations by phone and video chat. At this time the U.S. Bankruptcy Courts, the U.S. District Courts and New York State Court system are all open. We are continuing to file new cases and process our existing cases.

We hope everyone stays safe throughout these difficult times.

Should I Cash Out My Retirement Accounts to Pay Bills?

By the time many of our bankruptcy clients come to has they have exhausted most of their personal savings, and often their retirement assets. Some people invade these funds — that are intended to provide income in retirement — and use them to try make minimum payments on credit cards and cover living expenses. This is a very common scenario we see for people who have lost their job and unemployment has run out.

In bankruptcy, retirement assets, such as I.R.A.s and 401(k) are generally exempt. If someone intends to file bankruptcy and get a fresh start from their debts it doesn’t make a lot of sense to
use up an asset that you get to keep in bankruptcy to pay a debt that will get wipe out in the bankruptcy. Of course, some types of debt don’t get wiped out in bankruptcy (i.e, are nondischargeable), such as child support and other domestic support obligations, student loans, and certain taxes, among others. That is a somewhat different situation, but using retirement funds is still something that should viewed as a very last resort. There are also tax consequences of withdrawing funds from a retirement account.

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