How Does Filing Bankruptcy Affect Retirement Funds?

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Filing Bankruptcy Retirement

Will Filing Bankruptcy Take Away from My Retirement?

One of the biggest benefits of hiring a bankruptcy lawyer is they’ll be able to tell you all of the assets that will be protected through the process, and what assets might be susceptible to being taken. A common worry for many clients is if their IRA and other retirement accounts will be safe after filing bankruptcy. Having this concern is natural, so let us put it to rest for you.

Are My Retirement Accounts Safe?

Yes. Retirement accounts are considered exempt property. Your accounts will be safe from collections and creditors. Whether you file Chapter 7 or Chapter 13, these accounts won’t be factored in. This means they also won’t be taken into account when determining a repayment plan in Chapter 13. It also doesn’t matter how much you have in these accounts, they are still protected. Funds from accounts like 401ks, IRAs, defined benefit plans, and more will all remain untouched throughout the process of filing bankruptcy. However, as with most precedences in bankruptcy law, there are some exceptions. Make sure you keep these exceptions in mind when making your decision to file.


Traditional and Roth IRAs are the only accounts that have limitations on the amount of funds that are protected from creditors. The exempt amount is $1,283,025 per person. If there is an excess amount, that amount will be susceptible to collection by creditors you owe. Retirement benefits are also not exempt from creditors unless those benefits are necessary for you to live.

Should I Withdraw Excess Funds to Protect Them?

A big mistake many people make when filing bankruptcy is cashing out their funds before filing. If you do this, your funds will no longer be protections. It’s highly advised to not do this course of action. Not only do you take away the special protections for your funds, you also have to face penalties for early withdrawal and tax consequences.

Contact RGG Law if You’re Filing Bankruptcy

If you’re planning on filing bankruptcy, you can greatly benefit from the help of a bankruptcy lawyer. They can help you navigate the process and make the best decisions for you and your money. They can also help you choose which bankruptcy is best for you, between Chapter 7 and Chapter 13. At RGG Law, we work hard to get you through the process as painlessly as possible. Contact us today for more information on filing bankruptcy and to schedule a free consultation.