Should you keep or get rid of documents like loan documents, tax returns, and statements? In our complicated society, we are inundated with all sorts of documents. These documents can pile up to the point of annoyance, and it’s tempting to just recycle them. There are always exceptions, but the following are good guidelines for keeping or getting rid of documents. Be aware that none of this is legal advice, but instead is a good starting point. This post will not discuss bankruptcy, though documents can be an important part of that process.
Automobile Loan Documents: Keep these until your car loan is paid in full and the lender’s lien has been removed from the title (aka, the pink slip). If there is a question or an issue with your loan, you need the loan document in order to see its provisions that bind both you and the lender. The same advice applies to signature loans, except for the pink slip; keep the documents until you have a receipt or invoice showing that the loan has been paid in full.
Automobile Title: Keep this until you sell the car. If it is lost or misplaced, you can get a copy from the Department of Motor Vehicles (DMV).
Mortgage Documents: Keep these at least until you sell or otherwise transfer title of the property to someone else. If there is any chance of there being an issue with the property or the loan for it, keep the documents; it’s better to have them and not need them than the other way around. The best general advice is to keep these documents indefinitely.
Major Home Improvement Receipts: Keep these at least until your income tax preparation the year following the sale of the property. Your tax preparer will need these to determine whether you owe capital gains tax from the sale. To be safe, keep these indefinitely in case there’s a liability issue with any of the repairs that you did or had done.
Debit & Credit Card Receipts: Keep these until you can reconcile them with the monthly statement.
Bank Statements: It’s much better to set up an online account, view these online, and go paperless (that is, tell your bank or credit union not to send you paper statements). Some people advise that you print or download the most current statement for proof of your balance in case of an electronic data breach; whether to do this depends on how much risk you’re willing to take, but electronic data breaches of banks and credit unions are pretty rare. If you print the statements, be sure to shred them — don’t just throw them in the recycling where someone can get your name, address, and account number.
Retirement Account Statements: As with bank statements, it’s much better to just be able to access these online. If you want to be safe, download (or print) the quarterly statements and keep them until you can access or you receive your year-end statement. Download the statements and keep them for seven years after you retire or close the account. If you print anything, be sure to shred it when you want to get rid of it.
Insurance Policies: Keep these until you get your new policy or the insurance expires. Again, digital is better and you should download these if you are concerned that there could be a problem accessing them online.
Tax Returns: This is a big issue because there is no definite time where you are sure not to need them. Most tax preparers advise you to keep copies of your tax returns for six years, but there are some instances where you might need them forever. See this page from the IRS for more detailed information about this.
None of this information is about debt problems or solving them with bankruptcy, but hopefully it provides some guidance in deciding which documents to keep and which to get rid of. If you have serious debt problems, contact a bankruptcy lawyer today and get the help that you need.