In a Maryland, Delaware, Pennsylvania or Virginia bankruptcy, when you face how to pay your personal bills, there are several things to take into account before deciding to use your IRA or 401(k) for bill payment:
(1) Creditors, other than the IRS, cannot seize your IRA or 401(k) in settlement of their claims against you.
(2) Your IRA or 401(k) are assets that, once you’ve retired, will make a large difference in your retirement quality of life.
(3) Once money is withdrawn from either of these assets, that money becomes part of your taxable income and you must pay taxes on it.
(4) By withdrawing money from your IRA or your 401(k), you’re likely to have to pay a penalty. This tax penalty might prove to be a very large cost for using those funds to pay creditors who could be discharged in your bankruptcy case.
(5) For more information, read Extreme Caution: Invading Your IRA or 401(k) to Relieve Money Problems Might Ruin You
(6) To make your best decision for now and in the future, you owe it to yourself to consult a bankruptcy attorney.
