Daily Archives: April 4, 2013

Bankruptcy and 401(k) Accounts

401

images  accounts are exempt in bankruptcy cases.  That is, you can file Chapter 7 bankruptcy, and keep the money in your 401(k) account.

Creditors CANNOT GET IT.

What could be better than tax free savings?  Why, tax free savings that creditors cannot grab.

Yet, one in four American workers with a 401(k) account borrows money from it.  To do what?  Pay bills, what else.

If you need that money for living expenses, stop contributing to the 401(k), at least until you get to where you have EXTRA income that you can afford to save.

And many of these folks end up in bankruptcy.

I had another person call me this week, who had drained his 401(k) account in a vain attempt to keep his underwater house.

We humans make decisions based on our emotions.  We do what makes us feel good.  We avoid what makes us feel bad.

But we need to take the long view on these things.

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