You might be facing a ton of credit card debt, unsure of how you will ever pay it off. You might be considering Chapter 7 bankruptcy. You might also be thinking about dipping into your retirement savings to pay it off. Both options have benefits and drawbacks and it is important for you to be aware of what might be at stake with each. Read on to see what option might be best for you.
Protect Your Savings
From a financial advisors’ standpoint, it is rarely a good idea to touch your retirement savings. This is because your savings are meant to help you care for yourself in retirement and jeopardizing that could be extremely detrimental down the line. In addition, dipping into your retirement savings will require you to pay an early withdrawal tax penalty. It might not sound bad, but it just means even more money that you will not be able to use later on in life.
Even though protecting your retirement savings should be priority, circumstances vary from person to person. If you have enough in your retirement account and/or can make up the difference in no time, using your retirement savings could be a viable option.Another option would be to take out a loan from your retirement plan. Just know that you will have to pay it back over a certain period of time, but could be a worthwhile option if you can afford it. Again, it all depends on your specific circumstances.
It is well known that Chapter 7 bankruptcy is a great way to discharge most, if not all, of your credit card debt. This makes it a great option for many, but you will need to evaluate how your property and other debts might be impacted. If you have enough money from income, Chapter 13 bankruptcy might also be option. This way you would be able to pay off your debt through a three to five-year repayment plan.
While bankruptcy might be a good option, keep in mind it will impact your credit.
Following your bankruptcy, it will be difficult to qualify for a loan and interest rates will be significantly higher once you can. Still, if your debt has already hurt your credit score, filing for bankruptcy will not have as big of an impact.
Bankruptcy Lawyer Will Help Evaluate Your Options
When it comes down to it, you need to consult an experienced bankruptcy lawyer before moving forward. If in New Jersey, look no further than the Law Office of Joel R. Spivack. With over 25 years of helping clients throughout the state, Mr. Spivack understands the intricacies of bankruptcy and how it can impact your financial situation. He will also explain bankruptcy alternatives that might be a better route for you.
If you are looking to contact the Law Office of Joel R. Spivack, fill out the online contact form to begin discussing your case today.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.