One critical part of qualifying for bankruptcy in Charlotte, North Carolina is disclosing to the court your average income over the past six months, as well as your Current Monthly Income. Many individuals filing for Chapter 7 or Chapter 13 are using regular retirement withdrawals, to meet monthly debt obligations. Generally speaking, those withdrawals need to be disclosed but are not counted as income.
Stop Using Retirement To Pay Debt
Retirement funds are excluded from your bankruptcy estate. Simply put, that means the bankruptcy court can not get to your retirement funds. They are protected. So, using those funds to pay debt which would go away in bankruptcy doesn’t make sense. You’ve worked your entire life to build up retirement funds. Save your protected funds, and prepare to file bankruptcy.
Retirement Not Counted as Income
Generally, withdrawals from retirement accounts are not included in the income calculation. These withdrawals are more akin to a withdrawal from a savings account. Additionally, your Charlotte bankruptcy attorney can argue to the court that the retirement account(s) are a limited resource and would not continue indefinitely, thus further distinguishing them from income.
Taxable Income Distinguished
The bankruptcy court defines income differently than the Internal Revenue Service. Just because a withdrawal from your IRA or Pension Plan may qualify as taxable income for IRS purposes, does not mean it’s counted as income in a bankruptcy.
If you have any questions about retirement funds, IRAs or bankruptcy, call 704.749.7747 today to get your questions answered. The call is free and we’re here to help.