One of the worst things you can do is borrow from your pension since you are killing your retirement which destroys your savings when you need it the most after you have retired.
What many clients don’t realize is that after they borrow from their pension and then have a need to file bankruptcy, it can cause numerous problems for their bankruptcy case. When you borrow money and don’t get to the root of the problem, you will just continue the cycle of debt. It is just like putting a band-aid on a wound without understanding the cause of the problem.
When you borrow from your pension, there are four major issues that occur:
1) You are cutting into your retirement
2) You have phenomenal payments which cut into your net income. Mr. Taieb has seen clients who are paying over $1,000 per month paying back their pension loans.
3) There are major tax implications. One of Mr. Taieb’s clients who borrowed $20,000 from her pension had tax implications of almost $20,000. People don’t realize that the money you borrow from you pension is taxable income.
4) Finally, this could substantially impact your bankruptcy since this is income that is counted in the means test. Thus, it could prevent you from filing Chapter 7 or could substantially impact how much you pay to unsecured creditors in a Chapter 13 case.
Thus, if you are in debt you should contact TAIEBLAW to help get to the root of the problem by either restructuring under Chapter 13 or get a fresh start under Chapter 7 depending on your circumstances. But do not borrow money from your retirement unless you want huge repayments, tax consequences ad messy legal implications if you do file bankruptcy.
If you have any questions concerning this matter or any other matter contact TAIEBLAW at 856-235-4994 or visit our website at TAIEBLAW.COM.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.
If you have any questions concerning this matter or any other matter contact TAIEBLAW at 856-235-4994.
Steven N. Taieb, Esq. is here to help you and is a South Jersey Bankruptcy Attorney who has helped over 7000 people with their financial problems for the past 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.
We are more than happy to discuss all your options and to see if bankruptcy is the best option for you.