Is My Retirement Fund Safe If I Am Filing For Bankruptcy shelter?

Is My Retirement Fund Safe If I Am Filing For Bankruptcy shelter

?

Many people question what do they have to give up when they file for bankruptcy and what do they get to keep. Many people are concerned if they will be allowed to keep their retirement accounts intact. Are the creditors entitled to the money you have in your retirement funds? Bankruptcy court usually will keep your retirement funds untouched unless of some minor limitations.

The bankruptcy law was amended in 2005 by the Congress to make it more difficult for people to apply for bankruptcy protection. With the passage of this new bankruptcy law, your retirement accounts are almost certainly sheltered from the creditors who are seeking to liquidate them. Even though the new bankruptcy law has a few wrinkle on the exemption for your retirement plan, the dollar amount inside your retirement plan under bankruptcy shelter has become unlimited.

What retirement funds are safe from the creditors?

Any ERISA qualified pension plan is safe from the hands of the creditors, and they include:

401(k)

Money purchase plans

Keoghs

403(b)

Defined benefit plans

Profit sharing plans

IRAs (SEP and SIMPLE)

Traditional and Roth IRAs are the only 2 retirement funds that are accessible to the bankruptcy court for liquidation. The difference with traditional and Roth IRA is that the bankruptcy court can take the amount that exceeds $1,095,000. So if you have $2M in a Roth IRA, $905,000 can be taken by the bankruptcy court to pay off your creditors. The bankruptcy law set the amount at $1,095,000 which can change depending on the cost of living at the time.

If you are already getting distribution from any of your pension plan, and if you have any amount in excess of $1,095,000, the distribution from the pension plan can be subjected to repayment to the creditors. If you are already getting dispersion from your traditional or Roth IRA, and the total amount in the account exceeds $1,095,000 and you are filing Chapter 13 bankruptcy, any amount over the $1,095,000 can be subjected to the repayment of the creditors. But if you happened to file for Chapter 7 bankruptcy, the bankruptcy court will make the decision as to how much out of the retirement income can be used to pay off the creditors. The bankruptcy court also has your best interests at heart, because it needs to know that you can live within what you have.

If you are looking for additional on bankruptcy, please visit us at ToFileBankruptcyOrNot.com.

POST COMMENT

32 Eliminate Credit Card DebtWith Out Bankruptcy Bankruptcy: Caught In A Rat Race Debt Relief Advice –The Best Options to Avoid Bankruptcy Debt Settlement Vs Bankruptcy –Why Consumers Are Leaning Towards Debt Settlement Modes Of Payment In Los Angeles Bankruptcy Law Debt Consolidation - The Risks of Consolidating Debt to Avoid Bankruptcy Bankruptcy How You Can Tell If It Will Help You Finding A San Diego Bankruptcy Lawyer Personal Debt Reduction - Why Debt Settlement Has Replaced Bankruptcy Amongst Consumers Bankruptcy Credit Report- Handy Statement Of Credit Report Debt Relief Options For 2010 - Unsecured Debt Settlement is Favored Over Bankruptcy! Card Debt Bankruptcy - Why Bankruptcy Should Be Your Last Debt Relief Option Credit Card Bankruptcy Help - The Best Debt Relief Alternatives To Filing Bankruptcy