Bankruptcy Related

Can Creditors Take Money From My Unitrust Fund?

Written by Steve Rhode

Question:

Dear Steve,

I HAVE $40,000.- IN CREDIT CARD DEBT FROM TWO BANKS….THAT’S IT, BUT I AM OVER 70 YEARS OLD AND NOT WORKING AND AM ON SOCIAL SECURITY WITH A SMALL UNITRUST FUND FROM MY FORMER EMPLOYER.

IF I CLAIM BANKRUPTCY I WAS TOLD THEY CAN TAKE 10% OF MY UNITRUST FUND I BELIEVE EACH YEAR.

THIS IS AWFUL. I DON’T KNOW IF THAT IS TRUE OR NOT? CREDIT COUNSELING IS NOT FOR ME AS I CAN’T LIVE LIKE A “PAUPER”. I HAVE HAD HEALTH ISSUES AND NEED TO HAVE EXTRA MONEY.

I SEE NO WAY OUT BUT BANKRUPTCY.

I WAS THINKING OF DEBT CONSOLIDATION BUT THAT IS ALMOST AS BAD AS BANKRUPTCY BUT I CAN KEEP MY TWO CREDIT CARDS TO USE.

OF COURSE I WOULD HAVE TO BE VERY CAREFUL WITH MY SPENDING NOW…BUT, THESE COMPANIES HAVE “BAD REVIEWS”…AND, THEY CHARGE A LOT OF MONEY IN FEES…WHAT DO I DO?….PLEASE HELP

KRISTEN

Answer:

Dear Kristen,

It has been forever since I’ve had to talk about a unitrust fund. I find the advice that someone gave you that money could be taken following bankruptcy, to be dubious.

You present a couple of issues worth mentioning.

When you talk about a debt consolidation loan but keep a couple of credit cards that is generally a recipe for disaster. The remaining credit cards have balances that creep up to help make ends meet and before you know it you have a consolidation loan and more of the same kind of debt.

It seems the primary issue here is less about solving the past problem than it is about making sure you can live and deal with your medical issues.

So there are two logical solutions.

The first is to strongly consider bankruptcy to close the door on the old debt and have it legally discharged in about 90 days, tax-free. Filing bankruptcy costs money for professional services or you can see if you qualify for free help through Upsolve.

There is also help through another nonprofit, HELPS. This group can run interference between you and your creditors and while you won’t have to file bankruptcy, you may also continue to be subject to some collection activity.

There is no substitute for good legal advice other than talking to a bankruptcy attorney who is licensed in your state. I would suggest you find a good local bankruptcy attorney and have a free discussion about what bankruptcy would mean for you. Bankruptcy is the fastest way to get a fresh start for the least amount of money.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.

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