Will my IRA be used to pay creditors in Chapter 7?
Get Legal Help Today
Compare Quotes From Top Companies and Save
Secured with SHA-256 Encryption
Will my IRA be used to pay creditors in Chapter 7?
I am age 64. Wife age 64. Combined Roth IRAs approximately $14,000; unsecured debt is approximately $63,000.
Asked on August 31, 2011 Wisconsin
Answers:
M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney
Answered 13 years ago | Contributor
Whether a creditor can seize your retirement savings, or whether or not they can be used to pay creditors in a Chapter 7 bankruptcy, will depend on the type of account in which you are holding your retirement savings and the creditor that is seeking repayment.
If your creditor is a government organization, such as the IRS, then none of your accounts, not even an IRA is protected. Although the IRS is unlikely be able to force these funds directly out of your account, it will be able to take all or a portion of any distributions you take from these accounts.
On the other hand, your IRA is protected from general creditors to whom you may owe outstanding debts.
IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.