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How long do I have to wait to cash out my retirement after my chapter 7 bankruptcy in Arizona is discharged?

Chandler, AZ |

Chapter 7 has been discharged about a week. I don't want the BK to capture the funds.

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Attorney answers 4


I assume that you filed your own bankruptcy without the help of an attorney. Assuming that you have a traditional retirement account it should be exempt under Arizona law. Attached is a list of Arizona Exemptions.

If you own something that is exempt then you are welcome to do with the item as you please. That would include cashing it in, but make sure to pay taxes.

Whereas, if your asset is not exempt, then you must wait to see if the trustee will make a demand for the asset.

This information is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the related issues. Nor is this advice intended to create a client - attorney relationship. Every individual's factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state or locality regarding specific information


They were exempt as of the day of filing. The trustee has a limited time to object, if there was no objection, then you should be good to go. However, why would you want to withdraw retirement funds? Are you over 59.5, or are you going to have to pay the 10% penalty for early withdrawal? Why cash it out - why not take what you need, and leave the rest for the purpose for which it was intended, thereby limiting your tax exposure? You really ought to discuss this with your bankruptcy attorney and/or tax adviser on this.


Even if you properly exempted your retirement account, it is technically property of your bankruptcy estate until the trustee formally abandons it or until it is deemed abandoned by operation of law when your case is closed. Your attorney will now how to make sure it's safe for you to touch it.


Arizona exemptions protect retirement accounts from creditors. You need to take the following steps to determine whether you can cash out your retirement accounts.

First, you need to determine what type of account you want to cash out.

Second, review your bankruptcy schedules to determine if they were listed on Schedule B and exempted on Schedule C. Even if protection under the law is granted, you must list and elect to use the exemption.

Third, the interim trustee has thirty days from the creditor's meeting to object to your exemption (assuming it was properly taken). If the Interim Trustee believed your exemption was improper, then he/she would object to your objection.

If no objection was lodged by the Trustee and you have a discharge, you will be able to cash out your account without risk (assuming there is no fraud).

If the account was not listed or exempted, the schedules can be amended. Once the amendments occur, then you must wait thirty days to make sure the Interim Trustee will not object to the exemption.

Good luck!

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