Is My IRA 401k Protected from Creditors and Bankruptcy?

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So a creditor, most likely a debt collector who has purchased your debt from a credit card company, is calling and harassing you and one of the things the debt collectors says is that they are going after your  401k, IRA account. Can they?

No. Your IRA and 401k are protected, but, not 100 percent.

First, while your IRA and 401k are protected and you may pass the Means Test, what about your monthly expenses and more importantly your income in Schedule I of your petition? If you are making substantial withdraws from your paycheck in order to fund the IRA/401k, that could be objected to by the Trustee.

In one case, my client had over $100,000 in her IRA and was withdrawing over $400 monthly from her paycheck to contribute towards her IRA account, and while it was not an issue this time, that is not always the case because the Trustee could object to the $400 withdraw and push the case towards a Chapter 13.

In addition, if you withdraw money from your IRA account and now place it in your regular bank accounts, those funds will not be protected either.

So, if you are considering filing for bankruptcy, but also have to withdraw funds from your IRA or 401k for whatever reason, talk first to a bankruptcy lawyer to make sure you are protected.

To schedule your free consultation with bankruptcy attorney Alex Hernandez, call or text the phone number below.

Attorney Alex Hernandez

Representing clients in the areas of Chapter 7 Bankruptcy, Family Law/Divorce, and car and motorcycle accidents for 20 years. (904) 712-5565 or (305)-688-LAWS (5297). *Se Habla Español

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