If you are filing for bankruptcy, you probably have some questions about how it will affect all of your assets. One thing we frequently get questions about is retirement savings. Is all of the money you put away for your retirement in jeopardy now? Not necessarily. There are actually many types of retirement accounts that are protected from bankruptcy proceedings. A New City, New York bankruptcy attorney from our firm would be able to tell you more.
What Kinds of Retirement Savings and Accounts Are Protected?
Many people think that bankruptcy means that you have to give up absolutely everything, but many assets are actually protected by the process. Some of those protected assets include the most common type of retirement accounts.
To be a protected retirement account, it needs to meet ERISA standards, in line with the Employee Retirement Income Security Act of 1974. Accounts that can meet these standards include:
- 401k accounts
- Most types of IRAs
- Pension plans
- Keogh plans used by self-employed individuals
- Profit-sharing plans
- Defined-benefit plans
- 403b plans
However, it is also important to note that the state of New York gives you extra protections for retirement savings when you file for bankruptcy. Even non-ERISA retirement accounts can be deemed as exempt from collection by creditors. Your lawyer can tell you more about what kinds of assets are protected by state and federal law.
What About Withdrawn Retirement Savings?
If you have already withdrawn some of your retirement benefits from your accounts, then they would no longer be exempt assets. This is true even if the account the money came from was an ERISA-compliant plan.
Whichever type of bankruptcy you choose can affect exactly how these accounts and benefits are handled. In Chapter 7 bankruptcy, a monthly payment from a pension or another retirement account could be considered income. This is important because whether or not you can even file this type of bankruptcy is dependent on means-testing and meeting certain standards. In Chapter 13 bankruptcy, your withdrawn benefits could affect how much of your debt you must repay and what the structure of your payment plan will look like.
Should I File For Bankruptcy?
The answer to this question can depend on a wide variety of factors, but sometimes bankruptcy can give you a chance to rebuild. It will take a few years, but you can build up your credit score again. If you have any questions about the process, our lawyers can tell you more about how bankruptcy works and which chapter might be the best fit for you and your family.
Consult With Our Bankruptcy Attorneys
So if you think that filing for bankruptcy might be your best financial option, we are ready to help you. Contact the Lauterbach Law Firm and schedule an appointment with our team. We would love to tell you more about how we can help you.
