Bankruptcy and Retirement
401k, 403b, and IRA Considerations – Consult a Bankruptcy Lawyer
Maybe you lost your job or have fallen behind on your mortgage payments, perhaps you were seriously injured in an accident and have become overwhelmed by medical bills. No matter the circumstances, if you are buried in debt, you may be tempted to dip into your retirement funds in order to pay them. Before you do this, you should consider whether filing bankruptcy is a better option.
Retirement Accounts and Bankruptcy
Before you liquidate an IRA, 401(k) Plan, 403(b) Plan or any other type of retirement savings in order to pay bills, it is appropriate to speak with an attorney as to the consequences of your actions. Congress made a very clear statement that as between paying creditors and preserving your retirement accounts, the retirement accounts should be preserved. This is, no doubt, to make sure that when you reach retirement age or are otherwise no longer able to work, that you do not become a ward of the state because you no longer have retirement savings to support yourself.
Will I Lose my Retirement if I File Bankruptcy?
Most retirement accounts that are employer sponsored, such as 401(k) accounts are protected under the Employee Retirement Income Security Act (ERISA). In fact, other than domestic (divorce) or tax (IRS) actions, those assets are generally fully protected from creditors.
Individual Retirement Accounts (IRAs) are not protected under ERISA, however, they are protected in both the state and federal exemptions with certain restrictions.
These are general rules, and consumers should not transfer assets into or out of what they perceive to be protected accounts without first talking with an experienced bankruptcy attorney.
Contact The Ercolani Law Group Today – Get a Free Consultation.
If you would like to find out more about how your retirement plan may be affected by bankruptcy, feel free to contact the Ercolani Law Group to discuss your particular matter with an experienced bankruptcy lawyer. With our experience and knowledge of these matters, we can accurately evaluate your situation and determine whether you may qualify for retirement exemption and if all of your retirement funds will be protected. Email or call 805-338-6880.