For many people, a retirement account is their largest asset. Fortunately, most retirement assets are protected when filing a Chapter 7 or Chapter 13 bankruptcy. Pensions, 401(k) or 403(b) plans, and IRAs are the most common retirement assets, and the “fresh start” afforded by filing for bankruptcy includes the ability to keep these benefits. Potential exceptions to this include ownership of an inherited IRA, or when the IRS has filed a Federal Tax Lien.

While retirement assets generally are protected, that may change once the assets have been withdrawn, e.g. removing $10,000 from a 401(k) account and depositing it into a checking account. Also, it is common to see a bankruptcy filer who withdrew much or all of their retirement funds in a futile attempt to climb out of debt, before realizing that bankruptcy was the answer. Before you deplete your retirement assets to deal with your creditors, speak with a bankruptcy attorney. Doing so might save your hard-earned retirement funds for your future.

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