The U.S. Bankruptcy Code gives generous bankruptcy protection for retirement accounts. In most cases, the bankruptcy code allows you to protect your retirement plans from the claims of creditors. Most 401k plans, IRAs, pension plans, defined benefit plans, or other forms of retirement accounts are protected from creditors when you file for Chapter 7 or Chapter 13 bankruptcy. Some clients make the mistake of depleting retirement accounts to try to keep making minimum payments on credit cards, medical debts, or other debts. Unfortunately, many clients wind up filing for bankruptcy protection after they have already lost all of their retirement.
Before depleting your retirement account to pay creditors, contact an attorney to find out your options. Most clients are not required to give up any property when they file bankruptcy. This is particularly true in the case of retirement accounts. Although there are some restrictions on the timing of contributions to an IRA or other retirement account, bankruptcy protection for retirement accounts allows you to keep what may be your largest asset after bankruptcy.
Be sure to talk to an experienced attorney about bankruptcy protection for retirement accounts if you are in financial distress. Many financial problems get worse if they are not addressed with a reasonable plan, which should include an evaluation by an attorney. We offer free consultations in most cases, and will help you map out the best course of action.