Thomas F. Miles, Attorney and Counselor at Law
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Retirement accounts that are safe during bankruptcy

Debt is sometimes difficult to avoid. In most cases, it comes into our lives in small quantities. We make larger purchases on a credit card with the intent of paying it off either right away or in a few months. In other cases, people take on larger debts, such as when they purchase a home or a vehicle. And in some unfortunate matters, debt begins to pile up when medical bills accumulate. When debt becomes uncontrollable, consumers are put in a challenging predicament. However, filing for bankruptcy can be a real option and a solution in these circumstances.

Although we are aware that filing for a Chapter 7 bankruptcy is a way to eliminate debt, it might be confusing when it comes to how debt will be treated and how this could impact current and future assets. Because of this, older adults filing for bankruptcy might have concerns regarding what could happen to their retirement accounts if they decide to file for bankruptcy.

The decision to file is not an easy one to make. One does not want to deplete all of their savings and retirement accounts in order to address their current debt situation. Thus, bankruptcy is frequently turned to. While there are different types of retirement accounts, many are luckily protected from the bankruptcy process. Common retirement accounts include Social Security, IRA, employer-sponsored pensions, 401(k) accounts, annuity and saving accounts. Whether a retirement account is touched in the bankruptcy process depends on if it falls within under the title of exempt property.

Exempt property is the property that is not used to help discharge your debts in a Chapter 7 filing. With regards to retirement accounts that are considered exempt property in the bankruptcy process, this includes Social Security, pensions, IRAs, 401(k) and annuity accounts.

It is never easy confronting our difficulties in life; however, taking the time to understand how you can eliminate debt and its burdens in your life can be a very vital step to take. Thus, understanding the bankruptcy process and how it could impact your life is important information to obtain. Seeking legal guidance can ensure you move through the process efficiently while also protecting your rights and interests along the way.

Source:, "Can I Lose My Retirement in a Bankruptcy?" Carron Armstrong, Oct. 10, 2017

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Thomas F. Miles, Attorney and Counselor at Law
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