Van Nuys Bankruptcy and Retirement Lawyer
You have worked your entire life and have been looking forward to relaxing during retirement. Unfortunately, this is not certain for many people, particularly those who are struggling with significant amounts of debt. Retirees are on a fixed income, which makes repaying debt even more difficult than when you were in the workforce. Our Van Nuys bankruptcy and retirement lawyer can handle the details of your case, advise you of which bankruptcy is right for you, and your other options.
Retirement Savings are Typically Protected in Bankruptcy
Chapter 7 bankruptcy is a very popular option for retirees and for those planning to retire. Chapter 7 bankruptcy cases are typically finalized within three to four months. This type of bankruptcy allows you to discharge certain debts such as medical debt, personal loans, credit card debt, payday loans, and more.
Chapter 7 bankruptcy is also known as liquidation bankruptcy. The bankruptcy trustee assigned to your case will place all of your property into an estate. Assets from the estate can be sold and the proceeds are distributed among your creditors to try and repay a portion of the debt. Fortunately, however, retirement accounts are typically considered exempt and as such, cannot be used to repay the debt. Retirement accounts are exempt up to certain amounts and they are as follows:
- 401(k) plans are entirely exempt
- 403 profit-sharing plans are entirely exempt
- Simple IRAs and SEP accounts are entirely exempt
- Deferred compensation plans such as 457(b) are entirely exempt
- Individual IRAs are exempt up to $1.5 million
- Roth IRAs are exempt up to $1.5 million
Lastly, Social Security benefits that have not yet been paid are also exempt. This means you can continue receiving these benefits even if you have already filed bankruptcy.
Important Considerations for Retirement and Bankruptcy
If you have already received distributions from a retirement account, or Social Security benefits, they are no longer exempt in bankruptcy. Due to this, they will become part of your bankruptcy estate and the trustee can sell them to repay your creditors.
It is for this reason that it is of critical importance that you time your bankruptcy filing properly. It is typically recommended that you file bankruptcy before you retire. This will keep the assets in your retirement account protected. You will still be able to use them once your bankruptcy case is finalized and can maximize the amount you receive. The same holds true for Social Security benefits, unless you have placed them in a separate account and not commingled them with your other property.
Call Our Bankruptcy and Retirement Lawyer in Van Nuys Before You File
If you are planning to retire and file bankruptcy, there is a lot to think about. At Wadhwani & Shanfeld, our Van Nuys bankruptcy and retirement lawyer can provide the legal guidance you need so your future is protected. Call us now at 818-658-2669 or chat with us online to schedule a consultation and to learn more about how we can help.
