Hang on to Your Savings and House!
You may be tempted to use funds or property you have saved in order to make payments and stop creditors’ harassment. I hope you will contact a bankruptcy attorney before you do anything, but in the meantime, please try to avoid cashing out your retirement or the equity in your home.
Retirement Funds, Including Social Security
Typically, retirement funds are protected by law from the “reach” of creditors. That means that no matter what you’ve agreed, and no matter how aggressive the creditor, the law does not usually give the creditor a right to use your retirement funds to pay debt. This is true whether you’re in a bankruptcy proceeding or no.
But just because the law gives you this protection does not mean that the creditor will not want you to liquidate your retirement savings for payment. Don’t give your creditors rights that they would not otherwise have. I describe exemptions more in my answer to the question, Will I Have to Give Up or Sell All My Property? Can I keep my House, Car or Apartment?
Home Equity
Like retirement funds, and especially here in Massachusetts, the value of your home above the amount of your mortgage can be protected from the reach of creditors. No matter what you owe or to whom, the law allows you to keep a certain value in your home, called a “homestead exemption.” I describe exemptions more in my answer to the question, Will I Have to Give Up or Sell All My Property? Can I keep my House, Car or Apartment?