Retirement Funds and Bankruptcy
If you’re thinking about consulting a bankruptcy attorney, you likely have a lot of questions
regarding what may happen to your assets. Many people fear losing their retirement funds to
their creditors. Fortunately, thanks to new bankruptcy laws, almost all retirement accounts and
pension plans are completely exempt from being distributed to creditors. This means that if you
file a petition for Chapter 7 bankruptcy, your bankruptcy trustee will leave those accounts alone.
If you file for Chapter 13 bankruptcy, your retirement accounts will not influence your debt
However, bear in mind that the total amount of money in a retirement account may not be
completely protected. This applies to any ERISA-qualified pension plan, including 401(k)s, any
type of IRA, and profit-sharing plans. For example, if you have more than about $1.2 million in
your Roth IRA, the bankruptcy trustee may take the excess and distribute it to your creditors.
The threshold is adjusted every three years.
During your free consultation at Cutler & Associates, Ltd., a bankruptcy lawyer will review your
assets and explain which may be exempt.