Bankruptcy – Can I Keep Contributing to My 401k After I File?
Whether you file Chapter 13 or Chapter 7 bankruptcy in Georgia, you can keep contributing to your 401k retirement plan after you file.
I recently met with some bankruptcy clients in my Rome GA office who were concerned that they would not be able to keep saving for retirement after they filed. These bankruptcy clients are in their early fifties. Understandably, retirement is a major concern for them. Another incentive for them to keep making the 401k contributions is that the husband’s employer matches his 401k contributions. As you can imagine, they were extremely relieved when I told them that they would be able to keep making the contributions.
Saving for retirement needs to be a major concern for everyone. Experts tell us that we can’t count on social security and medical advances continue to increase our longevity.
I am amazed by how many bankruptcy clients will say, “I used to contribute to my 401k but I stopped because I needed the money to pay towards credit card debt.” I can certainly understand why someone may choose this course of action as a temporary stop gap measure. However, this a bad decision for the long term. Why would you ever want to stop contributing to a 401k if you have an employer who matches your 401k contributions? That is like throwing away money. When you contribute to a 401k or IRA retirement plan, compound interest works in your favor. When you pay interest on your credit card debt, you are going in the complete opposite direction.
Many credit cards have interest rates as high as 25 five percent. As a result of these high interest rates, it is possible for some people to spend their lives making interest payments on their credit cards and reaching the retirement age without any 401k savings.
For many people, wiping out the credit card debt through Chapter 13 or Chapter 7 so that you can be in a position to make future retirement contributions makes sense. Why not take advantage of a free consultation and meet with a bankruptcy attorney?