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Bankruptcy Survival Food; After You Run Out of Cat Food, After Spending Your Retirement Trying to Pay Credit Cards!

By Joseph McDaniel, Esq.

Okay, there's one major mistake people make before coming to see a bankruptcy attorney in Phoenix, or anyplace else in Arizona.

That mistake is spending all of the dough they have in their 401(k), or their IRA, or similar retirement vehicles.

Why is that a mistake? Well, the debtors in those cases mean well, but they don't get any extra gold star in the bankruptcy process from throwing themselves on an economic grenade.

Debtors who come in to visit BEFORE they plow through their retirement funds have a much easier time of life thereafter; for instance, they might be able to buy a new car for cash at an auction after they file their bankruptcy, out of retirement funds.

Just a thought. Depends on the plan; talk to your retirement planner, and find out about possible tax consequences.

Oh, yeah; tax consequences. As often as not, if a debtor steals all the money in the retirement account, in order to shove it into the rapacious maw of the credit card companies and banks, the debtors is paid for his trouble with a big ol' tax bill!

Yep! With the best of intentions, you can turn a big bundle of dischargeable credit card debt into a mess of nondischargeable tax debt!

Now, does that seem like a good idea to you?

And I've read stories about retirees who have to get their protein eating cat food, and that disturbs me.

But apparently, some people are working to give us an alternative to cat food for folks who are poor.

And the alternative makes cat food (normally made from fish or poultry) look very appetizing!

The moral: do not spend all the money in your retirement accounts in a futile, doomed effort to make credit cards love you again; they never did! Yes, you were just an object to them!

A wallet object.

Full post as published by Arizona Bankruptcy Attorney Blog on February 21, 2011 (boomark / email).