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West Palm Beach Bankruptcy & Business Attorneys > > Bankruptcy Attorneys > What Will Happen to My Retirement Savings If I File for Bankruptcy?

What Will Happen to My Retirement Savings If I File for Bankruptcy?


Making the decision to file for personal bankruptcy can be a difficult and confusing one, and many individuals in South Florida worry that they will lose a large portion of their assets, including their retirement savings, if they do decide to file for bankruptcy. Let us make clear up front that this is a common misconception, and debtors should not expect to lose their retirement savings. This misconception often leads debtors to wait before talking with a bankruptcy attorney, at which points their debts may have become more significant and their bankruptcy case may have become even more complicated. To be clear, regardless of the type of bankruptcy you are planning to file, you should not expect for your retirement accounts to be liquidated. A West Palm Beach bankruptcy lawyer at our firm can explain in more detail.

Bankruptcy Exemptions Prevent the Liquidation of Retirement Accounts in Chapter 7 Bankruptcies 

In a Chapter 7 bankruptcy, which is a liquidation bankruptcy, non-exempt assets are liquidated in order for creditors to be repaid according to U.S. bankruptcy law and for debtors to receive a discharge. Yet even in Chapter 7 bankruptcy cases, there are many assets owned by debtors that are not subject to liquidation. These assets are known as exempt assets, and they are made exempt by certain “exemptions” under state and federal law.

Most tax-exempt retirement accounts are exempt under Florida law, including 401(k) accounts, 403(b) accounts, SIMPLE IRAs, defined benefit plans, and Roth IRAs up to amounts of more than $1.5 million for each individual. In addition, retirement benefits for public employees are fully exempt, including teacher retirement benefits, police and firefighter benefits, and state and local employee retirement system benefits. In short, you should not expect any of these retirement benefits to be liquidated, and you will in fact still have them after the end of your Chapter 7 bankruptcy case.

Assets Are Not Liquidated in a Chapter 13 Bankruptcy Case 

Many individual debtors also file for Chapter 13 bankruptcy, which is a type of reorganization bankruptcy (as opposed to a liquidated bankruptcy like Chapter 7). While exemptions can still play a role in determining monthly payment amounts in this type of bankruptcy case, you should know that no assets are liquidated. Accordingly, any exempt assets, along with other non-exempt assets—including your retirement benefits—will still be yours at the end of your bankruptcy case and following your bankruptcy discharge.

To learn more about the specifics of your case, you should have a bankruptcy attorney assess your particular circumstances.

Contact a West Palm Beach Bankruptcy Attorneys

 When you are considering personal bankruptcy, it is important to work with an experienced West Palm Beach bankruptcy attorney at Kelley, Kaplan & Eller. We can answer any questions you have about the consumer bankruptcy process, discuss bankruptcy exemptions with you, and guide you through the entire process from start to finish. Bankruptcy law in the U.S. is complex, and it is important to have an advocate on your side even if you have relatively few assets. Whether you are planning to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, or another type of bankruptcy as an individual, our firm is here to help you. Do not hesitate to get in touch with us to find out more about the services we provide to debtors in South Florida.





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