Unfortunately, many Tennessee residents may find themselves facing difficult financial situations at some point in their lives. Because debt can accumulate quickly, the situation may soon become too much to handle on their own. Luckily, there are options such as Chapter 13 bankruptcy that could potentially help an individual get back on their financial track.
When filing for bankruptcy it is important to understand what accounts may be affected. It is true that certain retirement accounts are not subjected to being considered during bankruptcy proceedings, but if an individual inherits such an account, it could be considered part of a person’s assets. This decision was recently come to by the Supreme Court, which unanimously voted that inherited IRAs are not considered retirement funds.
Retirement accounts are typically not considered taxable due to the specifications of the account and the fact that penalties can be applied for early withdrawal. However, if an individual inherits such an account, those specifications no longer apply. As a result, individuals who have inherited these accounts could use the funds for whatever purchases they choose. Therefore, the court decided that inherited accounts could be subjected to bankruptcy proceedings.
Information on accounts like this is important to understand if a person is considering Chapter 13 bankruptcy. Because a Tennessee resident must qualify under certain bankruptcy laws, they will likely wish to understand all they can about their situation. If a concerned party would like to more closely assess their situation and learn how certain financial aspects could affect their eligibility to use bankruptcy to handle their debt, they may wish to utilize in-state resources.
Source: eba.benefitnews.com, “Supreme Court: Inherited IRAs subject to bankruptcy claims”, Richard F. Stolz, June 18, 2014