Can you lose your ira and 401 k in illinois if you declare bankruptcy

Asked almost 4 years ago - Hoffman Estates, IL

can you lose 491k and ira in illinois bankruptcy

Attorney answers (3)

  1. Martin Osinski

    Contributor Level 10

    Answered . No. The general purpose of a chapter 7 bankruptcy is to liquidate your debts and, if there are non exempt assets, to use those assets to pay off some of those debts. There are numerous exemptions which allow you to keep many of your assets. For example, all retirement assets are exempt. This means that you keep all such assets after the bankruptcy.

    You should consult with an attorney to determine what other assets may be exempt. You can potentially keep your care, your house, bank accounts, furniture, furnishings, and other items of personal property that fit into the exemptions.

  2. John C. Kunes Jr.

    Contributor Level 8

    Answered . Pensions and retirement plans do not become part of the bankruptcy estate and are not subject to the bankruptcy court's jurisdiction. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 created an exemption for tax-exempt retirement accounts including 401K accounts. The exemption is unlimited except for traditional and Roth IRAs.

    This answer is general information only, and not legal advice. Please feel free to contact me for a consultation.

  3. Henry Repay

    Contributor Level 16

    Answered . Retirement funds are exempt assets. With very limited exception, you will be able to retain the 401(k) and IRA funds through a bankruptcy.

    The scope of this space does not afford an opportunity to assess the situation and advise you. I recommend you assemble for legal consultation: (1) your income information for January 2010 through the present, including wages and unemployment during that period; (2) all your bills (three months’ copies neatly assembled); (3) last four years’ tax returns; (4) a credit report (use www.annualcreditreport.com to obtain free report if not requested in last year); and (5) other information that may apply, such as copies of lawsuits. Call at your earliest convenience to afford the most opportunity in which to be advised about your best course. You are not required to use an attorney in your area.

    I do not recommend filing bankruptcy on your own. There are too many complex issues. I have seen several posts on this site for debtors who filed on their own and are seeking counsel concerning complications. I believe most of them will have a hard time finding an attorney to get involved to unwind the mess without the attorney charging several times what would originally have been paid.

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