The planned closure of Regional Acceptance Corporation's Arlington office, a Truist auto-finance affiliate, will eliminate approximately 205 full-time positions in two rounds beginning around Nov. 30 and ending by Feb. 28, 2027, as reported by Chron. The layoffs, disclosed through a WARN notice, will affect workers who may face financial strain and consider drastic measures to manage debt.
In response, Leinart Law Firm is advising affected employees with credit card debt to review their legal 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, potentially allowing individuals to preserve retirement funds while seeking debt relief.
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. More critically, a withdrawal used to pay credit cards or medical bills converts protected savings into payments on debts that a bankruptcy discharge might have eliminated.
Leinart Law Firm emphasizes that 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 implications for the Arlington workforce and beyond are significant. With 205 jobs set to disappear, many households may struggle to meet financial obligations. Understanding that retirement accounts are largely protected in bankruptcy could prevent workers from making irreversible decisions that undermine their long-term financial security. As the layoffs unfold, access to accurate legal information will be crucial for affected employees to navigate their options effectively.
