By definition, an IRA is a personal savings plan for retirement that allows you to enjoy tax deductions.
But, in the eyes of the IRA, any money received by an American citizen could be treated as a taxable income if it meets certain conditions and, unfortunately, IRAs transferred to individuals after the deaths of their owners meet those thresholds and are treated as such.
How your inherited IRA will be treated by the IRS will depend on a number of factors, the two most important of which include the following:
- The type of IRA- there are two main types of IRAs in the US namely the traditional IRAs and the Roth IRAs. For traditional IRAs the savings are not taxable until they are distributed to you or to someone you choose to transfer them to. Distribution usually begins once you attain the age of seventy and a half. On the other hand, Roth IRAs are not taxed but you will also not be entitled to any tax deductions and distribution can begin at any time.
- Your relationship with the owner of the IRA you inherited- generally speaking the tax laws for inherited IRAs are much softer and much more lenient for spouses of the IRA owners than for other relatives and non-relatives who inherit the same.
Experiencing an illness or injury, whether you have health insurance or not, can be a severe impact to your finances. Filing bankruptcy because of the overwhelming medical bills is a growing phenomenon. Current statistics show that medical costs are a leading cause of a personal bankruptcy. When an illness strikes, people use all the possibilities to get a good medical care, though this often leads to spending all their savings to pay the costs of the treatment.
If bankruptcy turns out to be the only left option, filing a petition could discharge those debts. Fortunately, medical debts fall into a group of dischargeable debts and completing the procedure will resolve total amount of deficit or at least a part of it.
There are two ways of filing individual bankruptcy caused by the costs of the healthcare. The first one is to file under the chapter 7, which is the most common case, and the alternative is to file under the chapter 13. The chapter 7 includes automatic stay which prevents all the creditors from collecting their claims and all your debts will be discarded. The trick with Chapter 7 is that your income and value of the property needs to be low enough. Otherwise, if not exempt, the court will sell it in order to pay the creditors back. Medical bill will be discharged even if you have paid them with your credit card and there is no up limit to the amount of the bills you can discharge in this manner.
Filing under the Chapter 13 is a slightly different. Some of the debts will be discharged, and other will be postponed and repaid via repayment plan. Repayment plan is settled with the court according to your income, expenses, exempt property, total value of your property and minimal living standard you have to meet. Chapter 13 includes some debt limits, thus you may not qualify for Chapter 13, if your medical costs exceed these limits. Over the repayment period, you will repay a portion of the total debt equally to each creditor. Try to search for more, visit Chapter 13 Bankruptcy lawyers dallas
Estimate your finances carefully, explore all your alternatives, but if it turns out that medical bankruptcy is the only way out, file a petition. It will be a life changing decision, but it’s still worth saving your own health or the health of someone you love.
The bankruptcy laws and protection are designed to take the burden of overwhelming debts off the people’s back and give them another chance for a brand new start. Though this is a huge benefit for anyone who got stuck in a bunch of unpaid bills, the mere fact that you’ve ran out of every solution for your financial problems isn’t the only dark side of the story. Filing bankruptcy has several negative side effects, assuming that the process was completed regularly.
Your credit report will reflect your bankruptcy for the next ten years. You are not restricted from getting a credit, but it usually goes with higher interest rates, lower credit card limits and difficulties when asking for car loans, mortgages and several other things. Problems reflect on many areas of everyday’s life. If you discharge medical bills, it may be harder to get medical care in the future. Inform yourself more and visit bankruptcy attorneys Dallas.
You can still get credit, but you may be charged higher interest rates, receive lower credit card limits and have limited access to loans. Insurance premium may go higher. Also, employers or renters often see your bankruptcy as a risk and you may face troubles when looking for a job or a house to rent. Being honest about your situation can be a good approach sometimes, but you can also offer recommendations from your previous landlords or bosses. Once you file bankruptcy, you are not allowed to file it again for the next eight years. You should keep this consequence in mind when considering is this the best time to file bankruptcy.
One of the toughest consequences of bankruptcy is certainly its impact on your reputations and emotional state. Many newspapers tend to publish bankruptcy filings, since bankruptcy is considered a public record. Also, many of those who faced the death of their finances may struggle with depression, shame and lack of self-esteem considering themselves for failure. Fortunately, most of those who have been there and came back agree that bankruptcy isn’t the end of the world. Consequences can be handled successfully, all it takes is to play smarter in the future and keep the head up.
Bankruptcy is a serious decision with long-term consequences, including emotional ones and it can be quite disturbing life event. Unfortunately, its frequency became alarming and more than one million individuals file bankruptcy every year. Statistics show several leading causes of people going bankrupt. These are the occasions and mistakes you should be aware of in order not to exhaust all you financial sources.
The key cause of all individual filings are medical care costs. Even the people who have health insurance face huge bills after experiencing illness or injury. Since these costs can hardly be predicted or avoided, it is comforting to know that they are dischargeable, if the worst financial scenario happens. Similar to medical bankruptcy, student loans often bury people into bills and debts.
Losing a job without having emergency fund or an instant plan b may end up with bankruptcy for those who fail to find a new source of an income over significant period of time.
Poor managing of a budget, especially combined with overspending can exhaust all the savings and incomes and eventually lead to financial collapse. To learn more visit chapter 13 bankruptcy lawyers Chicago.
Even if you don’t spend your money irresponsibly, unexpected expenses can hit you anytime. Whether it’s a fire or flood in the house, car crash or anything similar, it can drain your total saving dangerously quickly.
Along with the emotional drama, divorce can bring up a lot of financial problems. It lowers income for one or both partners, the mere procedure costs, plus there is always risk of taking on a share of partner’s debts if you have co-signed or joint accounts.
Foreclosure, utility bills or credit debts are also on the list of frequent reasons for people going bankrupt. Fortunately, if any of these scenarios takes place, law offers bankruptcy as a way of discharging your debts and getting yourself a fresh start to move forward. Hopefully, without repeating or going through any of these dramatic situations again in the future.