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IRA Withdrawn After Chapter 7 Filed – Trustee Could Not Claw-back

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  • 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  • Trustee filed an action to recover the withdrawn funds.


  • Court initially held Debtors must turn over the $130,000 withdrawn from their IRA post-petition.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.