Bankruptcy and Retirement

When an individual is forced to declare bankruptcy, he or she may have questions about how filing affects savings accounts. More specifically, individuals may have concerns about whether they get to keep the retirement funds they may have spent years building.

The answer varies depending on a number of factors. If you or someone you know is currently facing bankruptcy, contact the Arizona bankruptcy lawyers of the Harmon Law Office, LLC at 480-829-0494 to discuss your financial options.

How Bankruptcy Affects Retirement Funds

There are two types of retirement funds: those that are part of the estate of the bankrupted individuals and those that are not. Those that are of the estate may not be protected, while those that are not part of the estate are protected.

Retirement plans such as 401Ks are not considered part of a bankruptcy filer’s estate, so these funds typically are not lost when the individual declares bankruptcy. However, individuals who have retirement plans such as IRAs may lose a portion of their retirement savings.

In most cases, individuals with retirement funds that are of the estate are allowed to exempt up to one million dollars of these funds. That means that the individual will get to keep $1 million of his or her retirement savings, while the rest typically goes to paying creditors.

Contact Us

Exempting your retirement can be a complex process, so it is important to get dedicated legal help when you face bankruptcy to help ensure that you are not left penniless in your retirement. Contact the Arizona bankruptcy attorneys of the Harmon Law Office, LLC today at 480-829-0494 for more information.