Retirement Plans and Getting Rid of Debt
While bankruptcy can have its disadvantages, you may not need to worry about your retirement plan.
As part of the Bankruptcy Abuse Prevention and Consumer Protection Act passed in 2005, many retirement plans can be exempt from creditors when you file bankruptcy. If you are in a copious amount of debt, credit collectors are harassing you, or you are being threatened with a lawsuit, you should call a top liquidation lawyer Memphis, TN has to offer for further advice.
Bankruptcy and Your IRA
In the case of an IRA (individual retirement account) a little over $1 million in either an IRA or Roth IRA will be exempted automatically through bankruptcy and thus not available to creditors. That number includes balances rolled over from a 401(k).
The dollar number increases regularly to account for cost-of-living changes.
Bankruptcy courts can exempt even more if they see a good reason; but remember, the exemption only works in the case of bankruptcy. Other debt settlement options do not give IRAs the same protection.
Some other things to consider:
When the IRS is a creditor, exemptions may not count.
If you have multiple IRAs, they are combined for a total dollar amount.
Each person’s finances are unique. The best way to know for sure how bankruptcy may affect your retirement plan and other assets is to talk with an experienced attorney.
Our Memphis bankruptcy lawyers can help you figure out your options and get you started. Contact us today to discuss your situation for free.