Chapter 7 Bankruptcy Code: Retirement Assets

Chapter 7 bankruptcy code allows for some assets to be exempt from your filing. It is important to consult an experienced bankruptcy attorney in your vicinity to ensure that your specific assets are exempt because the law varies in each jurisdiction.

Retirement Assets During Chapter 7 Bankruptcy

Bankruptcy law allows debtors to be relieved of excessive debts in certain situations. Income, assets and extent of debts (including types of debt) all play into whether or not you will be eligible to file for a Chapter 7 bankruptcy. Bankruptcy is governed by federal and state laws. State law is restricted to issues as to the relationship between debtors and creditors, whereas federal law governs the better part of bankruptcy proceedings.

Chapter 7 bankruptcy is also sometimes referred to as a liquidation bankruptcy. The way a Chapter 7 works is to dissolve qualified debts, including non-secured debts such as credit card debt and loans that are not secured by property. Some debts are not qualified for bankruptcy in most cases. For example, most tax liens or back taxes, most student loans and support payments or other court ordered judgments cannot generally be discharged through bankruptcy. So, a Chapter 7 will not necessarily relieve you of all of your debts. It can get rid of substantial amounts of unsecured debts though which can prove to be a great relief to a debtor.

To file for a Chapter 7, you will need to meet income requirements in your jurisdiction. A person who makes too much money in the prior six month period may not be eligible. Also, you will need to assess your assets. Because Chapter 7 gets rid of so much debt in complete, a debtor filing will be required to liquidate many assets (if the debtor has non-exempt assets).

Fortunately, qualified retirement accounts such as IRAs generally are not part of the bankruptcy estate. This is good news if you have a retirement account you wish to protect during a Chapter 7 bankruptcy. Consult an attorney regarding specific contribution limits to retirement accounts in Chapter 7 bankruptcy.

Getting Legal Advice

Contact an experienced bankruptcy attorney to help you assess your finances and assets. You may be able to keep some or all of your retirement accounts and still file for Chapter 7 to dissolve your non-secured debts such as credit card debts. Bankruptcy can help you get your finances back in order after an unexpected financial crisis.