' Bankruptcy Liquidation of Assets - Law Offices of Robert M. Geller
CALL NOW!
FREE PHONE/VIRTUAL CONSULTATION

Is Your 401k or Other Retirement Savings at Risk in Bankruptcy’s Liquidation of Assets?

bankruptcy liquidation of assetsIf you’ve spent years saving for retirement, putting that money at risk when you file for bankruptcy is likely one of your greatest concerns. The bankruptcy liquidation of assets allows the bankruptcy trustee to take your assets and liquidate them to pay your creditors. But does this liquidation apply to your retirement savings?

The simplest answer to this question is “maybe.”

Bankruptcy laws allow you to exempt most retirement savings when you file for bankruptcy. However, exemption laws vary from state to state, and not all types of retirement savings are protected.

Here’s what you should know if you’re filing.

Where is Your Savings?

If you want to understand how bankruptcy affects your retirement statements, start with understanding the various types of savings.

For example, social security payments are safe in bankruptcy until they reach your bank account. Some states do not exempt bank accounts from bankruptcy, so while the court cannot take anything from your established social security benefits, nor can they intervene as the payments are transferred from the government to you, it might be able to take the money once it’s in your account.

One way to protect them? Put them into a separate account so they don’t mix with other income. Your bankruptcy attorney can help you figure out how to best protect your social security income based on your specific situation.

Bankruptcy Protects Pensions, 401k, and Other Savings from Liquidation

Pensions are another concern for people filing for bankruptcy.

If you’ve earned a pension from a private employer, the funds are protected under the Employment Retirement Income Security Act of 1974 (ERISA). Plans must meet specific guidelines.

Furthermore, pensions paid to employees of churches, non-profit organizations, and governments are not covered by ERISA. Speak to your attorney about using these protections and what you can do if you worked for an employer not covered by ERISA.

To learn more about ERISA protections, check out this information from the US Department of Labor.

Additionally, private retirement accounts like 401(k) accounts, and traditional and Roth IRAs are protected in part or full from the bankruptcy court. Bankruptcy laws protect all funds in a 401(k). People with IRAs receive protection up to a certain amount that increases regularly.

Finally, if you have tax-deferred retirement annuities, they are exempt. However, other types of annuities are not.

You and your attorney should review your retirement savings assets and determine the best way to protect the money you’ve earned.

Don’t Use Retirement Savings to Avoid Bankruptcy

Some people turn to their retirement savings to pay off debt and avoid filing for bankruptcy. This might seem like a good idea, but in the long run, it can cost you.

Bankruptcy laws protect retirement savings. Using this money that could remain in your possession to pay debts that qualify for discharge is a waste. Not to mention withdrawing retirement funds early triggers a tax penalty.

You could find yourself relieved of a few credit card or medical debts, but back at square one saving for your retirement and in debt to the IRS.

Before doing anything with your retirement savings, it’s important to speak to an experienced bankruptcy attorney. The bankruptcy liquidation of assets puts your assets at risk. It’s important to have the guidance of an expert. The two of you can review your specific situation and determine the best way to proceed.

To learn more or to discuss your situation with someone who understands bankruptcy laws, contact the Law Office of Robert M. Geller at 813-254-5696 to schedule a free consultation.

Archive

Video Testimonials

Tampa Bankruptcy Law Blog

How Do I Find a Bankruptcy Attorney in Clearwater?

If you're facing financial hardships and are considering bankruptcy in Clearwater, finding the right attorney can be a critical decision....
Read More

Should I Sell My Home to Get Out of Debt?

Debt is a common modern problem. Whether it's credit cards, student loans, or medical bills, debt can cripple even the...
Read More

What to Ask a Bankruptcy Lawyer

What should you ask a bankruptcy lawyer? Financial problems can be incredibly stressful. One option that many people turn to...
Read More

Is It Easy to File for Bankruptcy?

Bankruptcy is a legal process that allows individuals and businesses to eliminate or reorganize their debts. It offers relief to...
Read More

How to Stay Motivated to Pay Off Debt

If you are struggling with debt, you are not alone. The average American has tens of thousands of dollars in...
Read More

Can I Fire My Bankruptcy Attorney?

Filing for bankruptcy can be overwhelming. Your bankruptcy attorney plays a crucial role in navigating you through the process. Unfortunately,...
Read More

Am I Responsible for My Parent’s Credit Card Debt?

As we grow older, our parents also age. Sometimes they become dependent on us in many ways. Even if they...
Read More

How to Hide from Debt Collectors

There are many ways to “hide” from debt collectors. You can ignore their calls, not answer your door, or ask...
Read More

Is Your Spouse Responsible for Credit Card Debt in Florida?

Debt can be overwhelming, especially when you're not sure who is responsible for it. That's why it's important to understand...
Read More

What Happens If You Ignore a Debt Collector?

Debt can be overwhelming. It’s easy to let bills pile up and miss payments, and before you know it, you...
Read More

Bankruptcy

For The Next 5 Days GET A FREE BOOK About Bankruptcy

Learn More

Infographics

We are A Debt Relief Agency.
We help people file for bankruptcy under the Bankruptcy Code

Pay Online Bankruptcy Courses Newsletter Subscription

Call For A Free Initial Consultation

813.254.5696

Tampa Office

Law Offices of Robert M. Geller, P.A.
807 West Azeele Street
Tampa, FL 33606
T: (813) 254-5696
T: (800) 853-7549
F: (813) 253-3405

Map And Directions

St. Petersburg Office

Law Offices of Robert M. Geller, P.A.
125 5th Street South
(Wells Fargo Financial Center)
2nd Floor, Suite G
St. Petersburg, FL 33701
T: (727) 532-3939

Map And Directions

Pasco Office

23526 State Road 54
Lutz, FL 33559
T: (813) 336-2320

Map And Directions