Bankruptcy And Retiremant Savings

by Hermin Dowe on July 23, 2015

One of the biggest concerns most people have when filing for bankruptcy is what will happen to their retirement assets. As you get older, the fear of losing your retirement savings can keep you up at night. A good bankruptcy attorney can help set your mind at ease and work with you to set up a payment plan or catalog your assets in a way that should not leave you out in the proverbial cold.

Which Assets Are Safe?

There are some assets that are retirement-related that are specifically exempt from bankruptcy proceedings. If you have stake in an employer or union pension plan, for example, these fall under the Employee Retirement Income Security Act (ERISA) and are exempt, meaning that they are not even part of a bankruptcy estate. Any specifically earmarked retirement plan that is covered by ERISA, such as 401(k)s, cannot be touched by a bankruptcy trustee. The law was overhauled in 2005 for the express purpose of providing more safety nets to those approaching retirement age, so as not to leave them in significantly reduced circumstances once they can no longer work.

One noticeable exception to the general rule of retirement assets being covered is independent retirement accounts (IRAs). IRAs do fall under ERISA, but instead of issuing a blanket statement that the entire account is exempt from bankruptcy, Congress held that IRAs up to $1 million (adjusted for cost of living every three years) are exempt, and any amount over that can be used to pay back creditors in a Chapter 7 or Chapter 13 filing. Rollover IRAs (where money from another retirement account like a 401(k) is transferred into an IRA), on the other hand, are completely exempt.

TAKING MONEY FROM YOUR RETIREMENT SAVINGS TO PAY CREDIT CARD DEBTS IS NOT VERY SMART.

Contact A Bankruptcy Attorney Today

If you are in retirement and need your case evaluated by an experience bankruptcy attorney. We have a long history of getting debtors to where they need to be, and we will work just as hard for you. Contact us for a free consultation today at 510-233-7700 or by email at had@dowelaw.com.

 

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