Proposed Law Would Open Retirement Savings To Pay Mortgages, But Louisville Bankruptcy Is Wiser

Two Georgia lawmakers have proposed bills that would allow homeowners to take out money from their retirement accounts, penalty-free, to pay for mortgages, The Atlanta Journal-Constitution reports.

While the lawmakers believe this could help cut into the country’s real estate and foreclosure mess, this would simply ruin a person’s finances in order to save their house, which has likely taken a large hit in value.
Louisville bankruptcy lawyers would advise a consumer struggling with foreclosure to set up an appointment today and consider the benefits of bankruptcy in Louisville rather than spill their retirement into a house saddled with an upside down mortgage.

Louisville has been hit hard with foreclosures, as foreclosure tracking company Realtytrac reports that on average 1 in 259 housing units is in foreclosure citywide. This puts most of the city in a “high” foreclosure rate, while only three zip codes are in a “low” foreclosure rate. Those areas see 1 in 1,627 housing units in foreclosure.

This city certainly isn’t an exception to the housing woes that have hurt our country. But that is no reason for a person to toss away their life savings for a house. Many people who want to keep their house can go through bankruptcy and come through the process in much better financial shape. Under Chapter 13 bankruptcy in Louisville, consumers can set up payment plans over a 3 to 5 year period to payback most of their debt and still keep their houses.

Under this new law, homeowners would have the option of taking money from their retirement portfolios and rather than pay a 10-percent penalty on what they withdraw, they could take it out without penalty to make a housing payment.

The bill sponsors — Sen. Johnny Isakson and Rep. Tom Graves, both from Georgia — believe that the bills would allow for a recovery in the real estate market while keeping people in their homes.

Louisville bankruptcy lawyers hope that Americans are smarter than that. Why would a person ruin their future savings — which are meant to provide food, shelter and medical care — for a house that has plummeted in value? People would be much wiser to keep their savings, declare bankruptcy. Whether or not they decide to keep the home.

Isakson said he believes that the only way the economy will recover is when the real estate market bounces back. And he thinks that the bill he has proposed will contribute to that by reducing foreclosures and stabilizing home values.

Graves said the bill allows people who have been responsible enough to save in the past, but who have lost their jobs, to not be punished by the tax laws and still pay their mortgages. The tax law now, he said, punishes those who want to put their retirement savings into their home.

Retirement funds are designed to help those who get to an age where they can’t work anymore. And if they can’t work, they can’t earn money. Having a house to live in is critical, but there are alternate housing options available. Retirement savings is required to sustain a bright future even if the present is bleak.

If you need to speak to a Kentucky bankruptcy attorney or Louisville foreclosure defense firm, contact the Schwartz Bankruptcy Law Center at 866-270-4495 for a free and confidential consultation to discuss your rights.

More Blog Entries:

Louisville Still Suffering From Housing Mess, But Bankruptcy Stops Foreclosure: September 7, 2011
Additional Resources:

Legislation to allow retirement withdrawals to pay mortgages, by Christopher Quinn, The Atlanta Journal-Constitution

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