Most working individuals with retirement accounts, such as a 401(k), an IRA, or a pension fund, expect that these benefits will be available at the time of retirement.  When times have become tough for you financially, and you have pursued bankruptcy to handle your debt, you likely wonder what will happen to your retirement benefits.  One of the biggest fears people have is losing their assets and hard-earned money through the bankruptcy process.  While some assets may be at risk if you file for bankruptcy, your retirement benefits will be protected, and considered exempt in most circumstances.

Your Retirement Funds are Exempt Property Under the United States Bankruptcy Code

Under the United States Bankruptcy Code, all retirement accounts and pension funds are considered “exempt property” for purposes of your bankruptcy proceeding.  This is good news for those who have been setting money aside for a substantial period of time.  If you choose to file for Chapter 7 bankruptcy, where your assets are liquidated in order to satisfy your creditors, your retirement benefits will not be liquidated.  If you choose to file for Chapter 13 bankruptcy, where you will have a repayment plan to satisfy your debt, your retirement benefits will be not be a factor considered when your repayment plan is formulated.

The exemption amounts for a retirement account or pension fund are essentially unlimited, except if the account is a traditional and/or Roth IRA.  In such cases, there is a monetary limit on the amount of retirement funds that can be considered exempt property.  The total amount of collective retirement benefits (across all accounts you may have) that can be considered exempt property is $1,245,475 per person.  Any additional benefits will be used to satisfy creditors.

When dealing with retirement benefits, there is a lot at stake, as you want to ensure you are doing everything you can to protect the money you will need upon retirement.  If you are experiencing financial hardship and believe bankruptcy may be the only way to eliminate your debt, you should speak with a Kansas City Bankruptcy Attorney who can evaluate your situation.  It may turn out that another debt-elimination method may be better for your financial situation. 

With the help of an attorney, you will have a thorough understanding of each of your options and what steps you need to take in order to keep your retirement benefits out of the hands of your unpaid creditors.  Tackling your debt alone may leave you vulnerable, and unsure of whether or not you have made the right decisions.  As such, deciding to work with an attorney now will lead you to your goals of becoming debt free and protecting your retirement benefits.

Contact Kansas City Bankruptcy Attorney Douglas Breyfogle to Schedule a Free Consultation

The fear of losing retirement benefits is certainly something that makes people hesitant to consider bankruptcy.  You have worked long and hard to set aside much-needed financial assistance for your retirement years.  Whatever your current financial situation may be, there are options available to you for eliminating and managing your debt.  If filing for bankruptcy is the best way for you to eliminate your debt, a qualified Kansas City Bankruptcy Attorney will help formulate a plan for you such that your retirement benefits remain untouched.  Douglas Breyfogle is a Kansas City Bankruptcy Attorney with more than twenty years of experience helping Kansas City residents like you face challenging financial times.  With his dedication to well-rounded and superior legal representation, Mr. Breyfogle will provide you with the tools and knowledge you need to find a way out of debt, and a way to live debt-free in the future.  To schedule your free consultation with Douglas Breyfogle to discuss your financial options, contact our office today by calling (913) 742-8700.