QUESTION
Should we cash in a retirement annuity, pay the credit debt off and then just pay the $200.00 per month or should we declare bankruptcy?
Asked on Feb 19th, 2015 on Bankruptcy - Washington
More details to this question:
We are being balance billed $18,000.00. They cut the amount to $12,000.00 after filling out a lengthy application for help. They want $200.00 per month for six years to pay this bill for an air transport for our epileptic eleven year old daughter. We owe over $25,000.00 in credit card debt and we have a house in foreclosure which has given us a 1099A but not a 1099C yet. We do not know if the bank is going to send a 1099C - everything we read said they can at any time. There was not a statute of limitations or something that said they had to send it before February 1st of that year. If we file for bankruptcy, we live with no credit potentially and hope that we can do fine. We need advice fast - the air transport company has given us one week to accept their offer or they will send us to collections. Thank you for any help you can provide.
10 ANSWERS
Do not use your retirement money to pay for that is why you should file bankruptcy those money are exempt money and you should keep these those funds for your retirement.
Answered on Feb 23rd, 2015 at 4:45 AM
You should consult with a bankruptcy attorney immediately. Do not liquidate your retirement account until you talk to a bankruptcy attorney. Your retirement account may be exempt 100% in a bankruptcy. If the retirement account does not fall under a specific exemption that allows for 100% exemption, most, if not all, may be exempted under an exemption referred to as "wild card." In other words, it may be that you can eliminate your debts while keeping most, if not all, of your retirement account. Using your retirement account to pay off unsecured debt will essentially be throwing money away if you end up filing a bankruptcy.
Answered on Feb 23rd, 2015 at 4:44 AM
Bankruptcy Attorney serving Madison, WI
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Richard B. Jacobson & Associates, LLC
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You cannot really expect reliable legal advice on an important and pressing question for free on the net. On Law Q&A we do not, and may not, offer individual legal advice. We do serve an educational function in telling people more general facts about applicable law. In your case, for example, I can tell you that tax qualified retirement plans are generally exempt from the reach of your creditors, including the bankruptcy Trustee. While under some circumstances the waiver of a deficiency on a mortgage may produce taxable income, it does not do so in every single instance outside bankruptcy. Within bankruptcy, the discharge of debt generally does not result in taxable income. Now that you have been told these facts, YOU MUST RETAIN AN EXPERIENCED BANKRUPTCY LAWYER who can consider all the relevant facts and applicable law and give you advice specific to your particular situation. Do not delay. Good Luck.
Answered on Feb 23rd, 2015 at 4:43 AM
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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The retirement plan funds are exempt in bankruptcy. All the debt you described in dischargeable. It's a no brainer that you should declare bankruptcy if you qualify for a Chapter 7. If you don't qualify for a chapter 7 and must file a Chapter 13, you need to run the numbers, find out a solid estimate of your monthly payment, then make a decision on whether Chapter 7 works for you. Filing bankruptcy doesn't mean that you'll never have credit again. You'll be inundated with credit offers, many are crappy but some will be decent. I don't necessarily recommend that you take any of these but if you make your payments on time on all your bills for 2 years your credit will be fine.
Answered on Feb 23rd, 2015 at 4:42 AM
Bankruptcy Attorney serving Buford, GA
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Kenneth A. Parker, PC
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It may be possible for you to keep the retirement annuity and file bankruptcy on your debts. Please contact a bankruptcy attorney before you cash in the retirement annuity
Answered on Feb 23rd, 2015 at 4:42 AM
2 Awards
I recommend you seek a consultation with an attorney to go over the details of your income, monthly living expenses, and assets in order to determine whether bankruptcy is an option for you, and if so, what type bankruptcy. Your situation is too complex for a simple answer online. Several offices offer a free hour consultation with an attorney.
Answered on Feb 20th, 2015 at 9:35 PM
Most retirement annuities are exempt in a bankruptcy, so you shouldn't have to liquidate that and you could still discharge the air transport charges and credit card debt through bankruptcy. If the mortgage forgiveness is reported as occurring in 2014 or before, it is not taxable, but if it is reported as occurring this year, it would be taxable unless you could claim the insolvency exception. The foreclosure is already a big black mark on your credit so you might be better off declaring bankruptcy at this point so you don't have to worry about taxes on the debt forgiveness and you can preserve your retirement. Of course, you would need to confirm that the retirement annuity is exempt, because if it is not exempt, it would have to be surrendered in the bankruptcy anyway. You should talk to a bankruptcy attorney right away!
Answered on Feb 20th, 2015 at 9:33 PM
Deborah F. Bowinski
You really need to sit down with a bankruptcy attorney and discuss your situation. It sounds as though it might be a reasonable solution for you, but without much more information it is impossible to know for certain. Most bankruptcy lawyers will offer an initial consultation at no cost or obligation. Do not try to make this decision without adequate information. And do not let the creditor bully you into acting precipitously just by threatening to refer the matter to collections.
Answered on Feb 20th, 2015 at 9:30 PM
Real Estate Attorney serving Florence, KY
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Linda S. Novakov & Associates, PLLC
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I think you should find a competent attorney who deals with debt and bankruptcy, who can assess your situation and determine with you, what would be the best way to approach this matter. There are a lot of factors that go into determining whether you will qualify to file for Chapter 7. The amount of your debt is not one of the qualifiers. The means test looks at the median income in your area. It really is not a simple yes or no question.
Answered on Feb 20th, 2015 at 9:29 PM
Bankruptcy Attorney serving Seattle, WA
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The Law Office of Marc S. Stern
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Sending you to collections is a worse threat to them than you. The amount that they receive drops substantially. The retirement accounts are exempt and you create a tax liability when you cash them out. You need to speak to a competent bankruptcy attorney.
Answered on Feb 20th, 2015 at 5:41 PM