Many senior citizens and even those younger debtors who are considering bankruptcy may be reluctant to file because they mistakenly believe that they will lose their retirement savings. Let's get the record straight, retirement accounts are generally protected from seizure in both a Chapter 13 bankruptcy and a Chapter 7 bankruptcy . In the case of a Chapter 13 bankruptcy, your bankruptcy repayment plan is funded by your income NOT by the liquidation of assets including your retirement accounts. And in the case of Chapter 7 bankruptcy, eligible retirement accounts are exempt from seizure by the bankruptcy trustee.
A debtor is usually able to exempt over $1 million in retirement savings for almost all types of tax exempt retirement plans such as:
- Pension Plans
- Profit Sharing Plans
- Stock Bonus Plans
- Employee Annuities
- Roth IRAs
- Government Deferred Compensation Plans
- Plans Of Tax Exempt Organizations
- And even some trusts
What this means is that a debtor filing for bankruptcy is not required to liquidate his/her retirement savings to repay debt. This is why it is so important for debtors struggling to pay debt to avoid liquidating all of their assets to do so. The bankruptcy laws were created to spare debtors the catastrophe of destroying all of their assets in an attempt repay debt.
Bankruptcy will give debtors the chance to discharge their debts and save their important assets which are often exempt from seizure in bankruptcy. To find out what other assets are exempt in bankruptcy please contact a Dallas-Fort Worth bankruptcy attorney today.