Chapter Seven Bankruptcy & Your IRA's

Are Personal Retirement Plans, Like IRA's, Protected in a Chapter Seven Bankruptcy Filing?

I am considering filing chapter 7 bankruptcy for the first time.

I have $100,000 in an IRA (a rollover from a 401K retirement plan). Will the funds be exempt?

I also have 2 cars (98 and 99) both paid for. Will both cars be exempt?

Lynda

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The US Supreme Court has ruled that IRA's and other self funded retirement plans, like 401K's, are exempt from bankruptcy proceedings. Therefore they cannot be liquidated to satisfy creditors.

The cars - or at least one of them - may be exempt up to $2750 (twice that amount if you are married and both filing bankruptcy) under federal law.

Your state might allow a more generous exemption for the cars. You will have to check with a local bankruptcy expert to find out.

Credit counseling is now required before filing. You will have to disclose all your assets and liabilities to the counselor who is supposed to inform you whether you qualify for Chapter Seven or not.

For a consultation with a local bankruptcy attorney, click here.

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