For those considering bankruptcy, protecting retirement savings is a top concern. You might be asking: Can you keep your retirement account if you file bankruptcy in California?
Yes, you can typically keep your retirement accounts when filing for bankruptcy in California. State and federal laws provide exemptions for most retirement accounts, including 401(k)s, IRAs, and public employee pensions, ensuring they are protected from creditors.
With decades of experience guiding Californians through bankruptcy, I’ve helped many safeguard their retirement savings during financial hardships. Let’s explore how these exemptions work and what steps you can take to secure your future.
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FAQs About Retirement Savings and Bankruptcy
How does the Means Test affect eligibility?
The Means Test determines whether you qualify for Chapter 7 bankruptcy by comparing your income to the state median. If your income is above the threshold, you must pass additional calculations to demonstrate limited disposable income. Those who don’t qualify for Chapter 7 can explore Chapter 13 as an alternative.
What happens to pensions in bankruptcy?
Pensions are generally protected under federal and state exemptions, particularly if they are ERISA-qualified. However, pensions not covered by ERISA could be subject to creditor claims in a bankruptcy case. Consulting an attorney ensures your specific pension is safeguarded.
Are retirement accounts protected in bankruptcy?
Yes, most accounts, such as 401(k)s and IRAs, are protected under ERISA or state exemptions.
What happens if I withdraw retirement funds before filing?
Withdrawn funds become part of your personal assets and may be subject to creditors.
Can I choose between federal and California exemptions?
No, California requires you to use state-specific exemptions.
How can I rebuild credit after bankruptcy?
Paying bills on time, maintaining a secured credit card, and staying current on your mortgage can help.
