Health Savings Accounts and Bankruptcy
Many who have a health savings account (HSA) or a medical savings account
(MSA) may wonder whether such funds can be protected in
chapter 7 bankruptcy . In many cases it depends on where you live and if the state offers protection
for these types of funds. This can be an interesting question for debtor
as it also depends on whether the funds are considered part of your bankruptcy estate.
When Bankruptcy is Filed
When bankruptcy is filed most assets and property belonging to the debtor is considered
their bankruptcy estate. Exemptions provided at the state and federal
level can help protect property and assets from being sold to creditors
once they are determined to be exempt. Keep in mind there are some exemptions
to the law, meaning every item you own may not be considered part of the
bankruptcy estate. If it is considered exempt, the trustee cannot seize
the item and it is considered safe.
Texas is one of Few States That Offer Exemption for HSA Funds
When it comes to HSA and MSA funds, you need to determine if they can be
exempt if they are in fact considered part of the bankruptcy estate. Texas
is one of few states that offer a specific
exemption for health savings accounts. In some states, it may depend on which exemptions
you use in your case. Some states may allow debtors to use a wildcard
exemption to protect such funds if an exemption is not available for this
type of asset. Check with your bankruptcy attorney to learn more information.
Have Any More Questions Regarding Health Savings Accounts and Bankruptcy?
If you have any more questions regarding bankruptcy and your health savings account feel free to set up a free consultation with our bankruptcy attorneys by filling out our contact form.