Millions of Americans are struggling financially. Between costs like outrageous medical expenses and student loans that plague people decades after graduation, it can be all but impossible for people to get out from under debt. This can be especially true after an event like job loss or divorce.
If you are in this situation, you could very well be considering debt relief options like bankruptcy. However, you might be hesitant because you don't want to lose all your assets, like your retirement plans and pensions. But you should know that these accounts are typically considered exempt from bankruptcy liquidation.
In other words, if you file for bankruptcy, you will most likely be able to keep various pensions, as they are considered exemptions.
Exemptions are crucial, whether you file under Tennessee bankruptcy laws or federal bankruptcy laws. They allow a filer to protect certain assets from liquidation, which is the process of turning over your estate to repay creditors. So, if you file for Chapter 7 bankruptcy, you can keep exempt assets like pensions as well as personal items, cars and your home, up to a certain value.
However, it is important to note that when you are putting together the list of all your assets to file for bankruptcy protection, you cannot exclude pensions or other exempt items. Just because they won't be discharged doesn't mean the courts don't need to know about them. If you submit an incomplete or inaccurate schedule of property and income, you can find yourself in serious trouble.
It is also important to remember that there are differences between exemptions in federal bankruptcy and state-level bankruptcy, so you will want to take a close look at which option allows you to keep your most valuable assets.
People work for decades building their retirement accounts and securing pensions. Protecting them in difficult financial times can be crucial, but it is important not to panic. If you are struggling financially and have questions about how certain decisions will affect your pension, you would be wise to talk to an attorney and carefully assess your options.