In today's sluggish economy, in order to keep the lifestyle, a lot of people tend to max out their credit cards and end up accumulate enormous amount of debts and to the point that paying off debt is impossible unless they take out their retirement funds to avoid bankruptcy.
Is it wise to use retirement funds to pay off debt or avoid any bankruptcy? In my opinion, it is definitely not a good idea to do so. Why? Because when your debt is so massive and your income is nowhere close to catching up the debt you owe, even if you use your retirement funds to pay down some of the debts, chances are you might still end up filing for bankruptcy in the end.
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So, does that mean you should file for bankruptcy instead of paying off debt? Well, not everyone can qualify for bankruptcy though. Bankruptcy attorneys that have good track record and complete knowledge about the federal bankruptcy laws and the state exemptions will be able to give you some valuable advice on what you can keep and what you need to give up while filing for bankruptcy.
In fact, bankruptcy attorneys are very much like your financial planners. They would first go through your income sources and evaluate your assets and expenses and then suggest you the changes in your finance.
A good bankruptcy attorney actually advises people to get debt help when first experiencing financial struggle and never recommends people using up their retirement funds.
As we all know, most people who are deeply in debt will do whatever it takes to not to filing bankruptcy and the only money they can think of will be their retirement funds. This is really a bad decision. The truth is people don't know they can file bankruptcy before they even go broke.
Although it may not be easy to qualify for bankruptcy, you can still file for Chapter 13 bankruptcy if you can afford a repayment plan through the court arrangement. As for Chapter 7 bankruptcy, you are required to pass the means test. Once you pass that test, you can basically keep most of your saving and wipe out all your unsecured debts and start a new chapter in your life.
Paying off debt would be great when you have the ability to do so; however, when you find yourself get stuck in the debt trap and don't know if filing for bankruptcy is your best debt relief option, do not just tap into your savings and thinking things will get better tomorrow. You should talk to your local bankruptcy attorney and decide what your best option is for you and your family.
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