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Can I take money out of my IRA account without it affecting my bankruptcy case.

Phoenix, AZ |

I have filed bankruptcy, I go to the meeting of the creditors the second week of March. I am not working and need to pay my household bills, elect. etc. I have no money at hand. I have money in an IRA acct. and need to know if I can take it out to use without it affecting my bankruptcy case.

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Attorney answers 4


Generally yes. While not familiar with the specifics of your situation, there is not any prohibition from accessing your IRA funds post filing. If you had done so pre-filing it could be an issue, but unless something very odd is happening in your case, you should be allowed to use it.


When you file for protection under the bankruptcy code and estate is created. The estate consists of all your property at the time of filing (a snapshot in time). The debtor may remove items from the estate by using available exemptions. If the IRA was exempt and removed from the estate, you can use that asset any way you like after filing.

Therefore, if you want to use your IRA money for current bills, you can. Be aware that there are tax consequences to converting IRA funds - sometimes pretty severe.

I hope this helps.
Steven A. Leahy

Please note that the above is not intended as legal advice, it is for educational purposes only. No attorney-client relationship is created or is intended to be created hereby. You should contact a local attorney to discuss and to obtain legal advice.


Whether you can withdraw money from your IRA depends upon whether the funds in your IRA are exempt assets for bankruptcy purposes in your State.

Many States exempt IRA funds from being administered in a bankruptcy but this can vary from State to State. As an example, in Louisiana where I practice, the IRA itself is exempt, but deposits made during the year leading up to the filing can be used to pay unsecured creditors.

Before you take money out of your IRA you should speak to an attorney to find out if you will have an exemption problem.

Also, remember there are tax consequences to making withdrawls from and IRA.

The information provided is not intended as legal advice. No Attorney/Client relationship is intended, implied or created.

Diane L Drain

Diane L Drain


Assuming you are using the Arizona exemptions - yes you can take funds from your IRA after you bankruptcy is filed. Make sure to determine the tax issues, if any, related to taking these funds. My best to you.


While most IRAs are exempt, the IRA still arguably remains a part of your bankruptcy estate until your bankruptcy case is closed, the IRA is abandoned by the trustee, or at a minimum, the time for the trustee to object to your exemption of the IRA has passed. To exercise an abundance of caution and avoid any issues with your bankruptcy trustee, it would be best to wait to withdraw any funds until after your bankruptcy case is closed (this happens some time after your bankruptcy discharge, usually within a few months but it can take longer or less time). If you do not want to wait until your case is closed and if the trustee does not object to your IRA exemption (assuming you properly exempted it and it is exempt), the next best option is to file a motion with the bankruptcy court to compel abandonment of this asset. If and after your motion is granted, you can proceed with withdrawing the funds. If these two options are not workable for you, the next best option is to wait, at a minimum, until after the period of time for the trustee to object to your IRA exemption has passed (30 days after meeting of creditors), at which time the IRA is effectively withdrawn from your bankruptcy estate. You should consult with your tax professional regarding the tax implications of the withdrawal.

Please note that the information provided is for informational purposes only and does not constitute, and should not be considered legal advice. Transmission of the information contained here and receipt by the reader is not intended to create and should not be construed as creating an attorney-client relationship.

Olga Zlotnik

Olga Zlotnik


The last/third option assumes that the period of time for the trustee to object to your IRA exemption has passed and the trustee has not objected to your exemption.

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