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Will I lose my retirement funds if I file bankruptcy?

Most retirement accounts are considered exempt through bankruptcy.

Congress reconstructed the bankruptcy laws in 2005. Under the changed law, barring a few exceptions, pension plans and retirement accounts are exempt and have no impact on what is paid out to your unsecured debt.

Plans that that qualify for this exemption include and ERISA qualified account:

  • 401(k)
  • 403(b)
  • Profit Sharing Plans
  • Defined Benefit Plans
  • Keoghs
  • IRAs (Roth, SEP, and Simple)
  • Money Purchase Plans

Certain Limitations

The exemption for IRAs and Roth IRAs is limited to $1,2475,475 per person. If any or all of retirement accounts contains above this amount, you cannot exempt the overage and can be taken by the court to pay back creditors.

Even though the money in your retirement accounts are exempt (aside from what is listed above), retirement benefits that are considered income are not protected.

In a Chapter 7 bankruptcy, the court cannot claim any retirement benefits that are needed for your livelihood, but may be able to demand you to pay creditors a portion of your benefits if it is determined what you are received is above and beyond what it would talk to pay your creditors.

With regards to a Chapter 13 bankruptcy, any income that you receive through a retirement account is taken into consideration when constructing your repayment place and will determine how the payments of your unsecured debts will be allocated.


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