Many people labor under a mistaken impression that bankruptcy means a person has lost everything. Far from it. Bankruptcy means that a person is having cash flow problems and is unable to repay their debts.

 

Bankruptcy law firms in Nassau County are reporting that people who are facing bankruptcy, and who are unaware of the governing laws often lose far more than they need to.  Bankruptcy is a complex issue, and now, with the recession making things even worse people are on edge about their cash flow and retirement funds.

 

Nassau bankruptcy lawyers, say that most people are unaware of the protections offered to them under bankruptcy laws. It is common for people facing bankruptcy to liquidate their 401(K) and other retirement savings in an effort to pay off creditors and prevent bankruptcy. What they do not realize is that they are doing themselves more harm than good by these actions. In most cases, these funds are not enough to pay off the outstanding debts, and the partial clearing of debts does not stop bankruptcy proceedings. Also, the sudden liquidation of the retirement funds places a needless tax burden on the debtor.

 

Retirement savings should not be liquidated in bankruptcy cases.  Most forms of retirement savings are not affected by bankruptcy since they are not considered to be part of the estate which is liable for paying the debt or are exempt from creditor claims.

 

Various laws passed over the last few years have also offered additional protection to those facing bankruptcy. The trouble is that people either do not know about them or are unable to grasp the intricacies and appreciate the amount of protection they are entitled.

 

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