Hi, I’m Mike Greiner. I’m a bankruptcy attorney with The Financial Law Group here in Warren, Michigan. And I’m here to talk to you today about your IRAs and 401Ks as you go through bankruptcy.

One of the biggest concerns that my clients have is the fact that they might have accumulated some retirement funds in a IRA or 401K and their concerned about losing those funds, and rightfully so. That is most people’s retirement, these days so, protecting that is a very, very important part of the process. The good news is, is that IRAs and 401Ks, generally speaking, are totally protected as you go through the bankruptcy process. So, even if you have $1,000,000.00, sitting in 401K accounts, those funds are totally protected. They’re there for your retirement and your creditors cannot touch them.

The sad thing that I sometimes see is where people have taken a bunch of money out of a 401K account to pay back their creditors. Because what happens then it that you’ve essentially given your creditors access to funds that otherwise they would have no access to otherwise. I strongly urge people to think of 401K accounts as savings for retirement. It is a savings account. It is not something that you can dip into when an emergency comes up or when you need to pay a certain bill or when you need to take care of one issue. What it is, is it’s a savings for retirement. I will say that there’s one exception to my rule there and it is where people have sometimes been able to take money out of a 401K and actually buy a house.

There are some opportunities for buying houses that are very inexpensively in the current economy and I’ve had some clients that have been able to take money out of a 401K, buy a house and own it free and clear or darn near free and clear and that’s been a really good option for a lot of people. Point being, don’t take money out of your 401K to pay credit card debt. That’s a complete waste. And don’t worry about as you’re going through a bankruptcy case losing your 401K. If you want to find out more about bankruptcy or your 401K for that matter, please feel free to give me a call. My phone number is 586-693-2000. We offer free consultations and I’d be happy to meet with you personally.