BACKGROUND:
- Retirement accounts are exempt when you file bankruptcy.
- You are able to keep your retirement accounts and protect your future.
- Debtor filed for Chapter 7 Bankruptcy
- Debtor withdrew $130,000.00 from his IRA (did not rollover the funds into another Retirement Account) after petition was filed but before case was closed.
- Trustee filed an action to recover the withdrawn funds.
COURT RULING
- Court initially held Debtors must turn over the $130,000 withdrawn from their IRA post-petition.
- Court reversed its ruling holding that in a Chapter 7 case, where the time to object to exemption has expired, Debtors can withdraw from their IRA without the Trustee being able to claw-back the funds for creditors.
It is important to hire a Board Certified NJ Bankruptcy Attorney when you file for Bankruptcy to protect you from claw-backs.
