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Chapter 7 can protect your retirement funds

When dealing with your personal finances, you have two major considerations. First, you must be aware of your present needs and budget yourself accordingly. But you also must keep an eye on the future, and prepare for your retirement. And the present and the future are not mutually exclusive. Your current financial situation will dictate how much you can put into your retirement funds.

Saving for the future can be difficult in the best of situations, but if you should suffer a sudden financial setback, you may try to regain your fiscal balance by diverting money away from your retirement accounts. This could be a good move if you can pay your debts in a reasonably short time. But if solvency becomes an impossibility, you need to take steps to protect the retirement funds you have already accrued.

Fortunately, certain assets and property are protected when you file for bankruptcy. Under Chapter 7 bankruptcy, retirement funds, such as those contained in 401(k) plans, fall under the protection of the Employee Retirement Income Security Act. Thanks to ERISA, you will typically not have to forfeit your hard-earned retirement funds should the need arise to file for Chapter 7.

But it is important to understand that while ERISA is a broad-based act that applies to most Chapter 7 contingencies, there can be exceptions. So, if you are considering filing for Chapter 7, it could be advantageous to seek the advice and guidance of an experienced Texas bankruptcy attorney.

Before you start to dip into your retirement funds to pay your debts, think carefully about the long-term consequences. It is quite likely you will discover that you will be better served by having many of your debts discharged and keeping your retirement goals intact by filing for Chapter 7.

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