In this episode of The Georgia Bankruptcy Podcast, we dive into how 401k's and other retirement accounts are treated during bankruptcy, especially when adult children are involved. Discover the protections in place for your hard-earned savings and learn the crucial steps to safeguard your financial future.
Whether you're considering bankruptcy or just planning ahead, this episode is packed with valuable insights. Tune in to navigate the complexities of bankruptcy laws and secure your assets.
Transcripts
Jeff Kelly: [:
from their 401k to pay off
their child's credit card debt
or frankly, any other debt
for that matter?
Then of course, as you can probably imagine,
my answer is a resounding, no, don't do it.
Let me go through the reasons.
Welcome to the Bankruptcy Podcast, a podcast about untangling the complex world of bankruptcy in Georgia. Each week, we deliver the best insights and practical advice on how to navigate the legal waters of bankruptcy with expert guidance and real life stories. Now here's your host, Jeff Kelly.
, my answer is a resounding, [:
Number one, in most cases, the child has unsecured debt. And you know, the adult child could probably, or maybe file a chapter 7 and wipe out the debt or maybe they could file a chapter 13 and take care of the debt on their own. But when a parent comes in and saves a day and borrows against their 401k or takes worse yet pays a penalty to take an early withdrawal, that is terrible.
d's debt that could possibly [:
Now I have four kids, so hey, I know what it's like to you know, you love your kids, you want to protect them from pain. But here's the cold hard truth as a parent. When you take away the pain, you are also taking away a lesson. And I cannot tell you how many times in the 25 years that I have been practicing bankruptcy, I have seen parents who end up in bankruptcy because they keep bailing their kids out over and over and by the time they come to see me there is no more 401k money. They've used it all bailing the kid out of whatever jam they were in, don't do it.
fe have been through painful [:
You're not supposed to tap it ahead of time. If you do, you're going to miss out on future growth of that 401k and you're risking an option that, you know, you may not have a 401k if if you go down that path, don't do it. The penalties are like 10% for early withdrawals, and that's in addition to income taxes. Bad idea, it's a bad path to go.
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Georgia, helping people get [:
Jeff Kelly: And again, I think it's okay for a parent to think about their own financial stability because none of us want to be a burden to our children. When we hit that age, we can't provide for ourselves. And when you put your 401k at risk over stupid things, it's possible you could be setting yourself up for that.
:
yourself and don't touch the [:
Narrator: Thanks for joining us this week on the Bankruptcy Podcast. Make sure to visit our website, kellybankruptcy. com, where you can subscribe to the show in iTunes, Spotify, or via RSS. So you'll never miss a show. While you're at it, if you found value in this show, we'd appreciate a rating on iTunes. Or, if you'd simply tell a friend about the show, that would help us out too.
If you liked this show, you might want to check out our guide to bankruptcy in Georgia. Helping people get out of debt. Available at kellycanhelp. com slash welcome. Be sure to tune in next week for our next episode.
