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Bankruptcy Retirement Account Exemption Explained

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Bankruptcy Retirement Account Exemption Explained

Bankruptcy Retirement Account exemption, bankruptcy lawyer

Written and Verified by Ralph A. Ferro, Jr., Esq.

Bankruptcy Retirement Account Exemption Explained.

Bankruptcy retirement savings accounts/dollars are exempt in bankruptcy.   Only if you do not withdraw these funds prior to filing.   Example of retirement account exemptions in Bankruptcy are: 401K, 403B, IRA, Pension, Roth-IRA).   The monies you have in your retirement accounts are protected in all Bankruptcy filings.   You should not withdraw these funds unless you have carefully examined other options.  Retirement savings is a great financial strategy for your future.    Hopefully, if you never withdraw these funds until you have reached retirement age, a substantial nest egg will serve as a cushion for your future.    Consultation with a BK lawyer is essential.

It is never a good idea to tap into your retirement account early.  

  • An early withdrawal could cost you penalties.    This is just one basic reason it is not a good idea.  
  • You will need this money some day and it will not be there for you.
  •  I have found that many debtors, before they come to me for Bankruptcy, have tapped into their retirement funds.  Yet, they are still struggling and cannot catch up.

Trying to gain control of outstanding debts that are just compounding by the day is a stressful situation.   

Retirement Account Exemption (all Bankruptcy Chapters:  7, 11 or 13)

It is important to know that retirement money is exempt from Bankruptcy.    There is no limit to the amount of money in your retirement funds to be exempt from Bankruptcy.   Rather than pull out dollars from these funds, you should make an appointment with me.    I am a NJ Bankruptcy Lawyer and will determine if Bankruptcy would be a better option.   Bankruptcy Code does not permit creditors access to your retirement funds.

Once you withdraw your retirement account funds,  you cannot go back and exempt these accounts in Bankruptcy.   Even if you withdraw for 1 day, that is considered a withdrawal that cannot be reversed.  Then the retirement account exemption is not applicable.

Also, retirement withdrawals within six (6) months of a Bankruptcy filing are considered income.   This withdrawal could potentially make you ineligible for a Bankruptcy.

You should seek advice from a Certified BK lawyer to determine if Bankruptcy (Bankruptcy Chapter 7, Chapter 11, or Chapter 13 bankruptcy) is right for you before you make withdrawals from your retirement savings.

Do not tap into your retirement monies to pay debts.    Call me:  Ralph A. Ferro, Jr., Esq. for a free Bankruptcy consultation.    I offer Bankruptcy protection for your retirement.