Planning for Retirement After Bankruptcy

If you must file bankruptcy just before retirement, you may be concerned that your hard-earned savings will evaporate and that you will be facing your golden years with no income and no assets. In reality, comfortable retirement after bankruptcy is possible, particularly given the fact that many retirement assets are protected from confiscation by your creditors.

Retirement Accounts and Bankruptcy

In 2005, Congress completely rewrote bankruptcy law in relation to retirement accounts. Almost all pension plan funds, retirement savings accounts and other plans with retirement rules and stipulations are exempt from bankruptcy. This means that you get to keep them if you file Chapter 7 and protect them from the amount available to pay your creditors if you file Chapter 13. Most ERISA-qualified pension plans, including 401(k)s, 403(b)s, IRAs, Keoghs, profit-sharing plans and defined-benefit plans qualify for this exemption. However, there are exceptions, so it is important to talk with a qualified bankruptcy attorney before making any assumptions.

What About My Home?

Many people who are close to retirement are also close to paying off their mortgages or have already paid them in full. In any type of bankruptcy, your home may be considered an asset, so it is important to understand the exemption scheme for protecting equity in your home from creditor deprivations. If you own a home in Arizona, you actually enjoy more home protection than is given by federal law. Arizona residents can protect up to $150,000 of their home’s equity in bankruptcy under a homestead exemption. While this exemption does not apply to any investment or rental property the debtor may own, it does help those who file bankruptcy protect themselves from losing their homes. There are exceptions to the homestead exemption rule, especially if you just bought the house prior to filing bankruptcy, so it is important to check with your attorney before filing to maximize your exemption.

Is Bankruptcy Right For Me?

If you are facing retirement with crushing debt, bankruptcy may give you the relief you need. However, it is very important for you to understand the pros and cons of filing bankruptcy before making a decision. The bankruptcy attorney at the Oswalt Law Group in Phoenix are ready to help you determine if bankruptcy is the right choice for you. We will examine your financial situation and help you make an informed decision about filing for bankruptcy.