Will I Lose My Retirement if I File for Bankruptcy?
One of the questions Harold Shepley & Associates receives is, “Will I lose my retirement accounts if I file for bankruptcy?” You’ll be glad to hear that the answer to this question is “No.” When filing for Chapter 7 or Chapter 13 bankruptcy, you can keep your pension and retirement plan, with a few exceptions and limitations. Make sure you discuss your retirement accounts with a bankruptcy attorney if you are considering bankruptcy.
Because retirement accounts are exempt in Chapter 7 and Chapter 13 bankruptcies, the entire amount of the account is protected. This includes:
- IRAs (Roth, SEP, and SIMPLE)
- profit-sharing plans
- money purchase plans
- defined-benefit plans
Most of the time these plans must either be ERISA qualified or have ERISA like protections in order to qualify. Your HR director will know what type of plan you have and your bankruptcy attorney will know if it then qualifies.
There are limits to the rule, though, involving traditional and Roth IRAs. There is an exemption limit of $1,171,650 per person. That means creditors cannot touch up to $1,171,650 in total for all your accounts. Anything in excess, though, the bankruptcy court can use to pay back your creditors. This amount is adjusted every three years to take into account cost of living increases.
If you find yourself in a financially difficult situation due to debt, you have options. For an in depth look at your situation you should contact a full service debt relief law firm like Harold Shepley & Associates. We can answer any questions you may have about debt relief and bankruptcy. Contact us today at 1-866-284-7062 or visit us at www.shepleylaw.com to find out more information on your debt relief options.