Regional Acceptance Corporation, a Truist auto-finance affiliate, will close its Arlington office and lay off approximately 205 full-time employees in two rounds starting around Nov. 30 and ending by Feb. 28, 2027, according to a WARN notice reported by Chron. The closure adds to the financial uncertainty facing workers in the region.
Leinart Law Firm advises affected workers with credit card debt to review their options before withdrawing retirement savings to pay creditors. The firm’s bankruptcy lawyer in Arlington, TX can explain how Texas exemptions apply to 401(k) and IRA balances.
Texas and federal law treat retirement savings differently from most other assets in a Chapter 7 bankruptcy case. Under Section 42.0021 of the Texas Property Code, employer retirement plans and individual retirement accounts are exempt from seizure for debts, whether vested or not. Federal bankruptcy law separately exempts funds in tax-exempt retirement accounts, so a 401(k) balance generally stays with the filer.
However, early withdrawals are generally taxed as income, and a 10 percent additional tax may apply to distributions taken before age 59½. A withdrawal used to pay credit cards or medical bills converts protected savings into payments on debts that a bankruptcy discharge might have eliminated.
Leaving funds in the employer plan or rolling them into an individual retirement account keeps the money protected as a worker weighs other options. Chapter 7 may discharge most unsecured balances, and a Chapter 13 repayment plan can give a household time to catch up on a vehicle loan or mortgage.
“Many people treat a 401(k) as the first source of money for debts after a job loss, yet it is often the account creditors are least able to reach,” said Marcus Leinart, founder of Leinart Law Firm. “We review retirement balances, severance, and debts together before any money leaves the account, because a withdrawal can carry tax costs and forfeit protections a bankruptcy filing would preserve.”
The layoffs underscore the importance for workers to understand their rights before making financial decisions that could undermine long-term security. With proper planning, retirement funds can remain protected while other debts are addressed through legal channels.
