Retirement accounts such as a 401k or an IRA are a common concern for people considering bankruptcy. This post covers the qualified retirement exemption in Chapter 7 and Chapter 13 bankruptcy, and why the timing of transfers into a retirement account matters.
Frequently Asked Questions
What happens to my 401k if I file bankruptcy?
A lot of clients are concerned about what can happen to retirement accounts such as a 401k or an IRA when they file a bankruptcy. Whether it’s a Chapter 7 or a Chapter 13 bankruptcy, there is what’s called a qualified retirement exemption, which does protect 401ks and qualified retirement accounts in a bankruptcy.
One thing that you do want to be mindful of is it’s also a little bit dependent on when you transferred funds into that account. If you recently transferred a large sum of money into a retirement account, whether it’s a 401k or any other qualified retirement account, it may not be protected. That is something that’s very important to keep in mind.
Are you struggling financially? Pratt & Maegli Law Firm in Rockford helps Illinois families and individuals explore Chapter 7 and Chapter 13 options with clear answers and a personal approach. Call (815) 315-0683 or visit rockfordbankruptcytoday.com to schedule a confidential consultation and take the first step toward real financial relief.