• FRS Law Group

    (Flinn, Ruble & Salazar)

    Elgin IL: 224-276-6641
  • FRS Law Group

    (Flinn, Ruble & Salazar)

    Sycamore IL: 630-202-1559
  • Donahue & Walsh, P.C.
    McHenry IL: 815-889-2364
  • Granger & Donahue
    Rockford IL: 779-203-9049
  • Cohen & Donahue
    Palatine IL: 847-452-5124
PI Attorneys of Northern Illinois

A Proven Leader In Illinois Criminal Defense And Real Estate Law

Will I lose my retirement savings if I file for bankruptcy?

One of the biggest concerns of people who are contemplating bankruptcy is whether they will lose their retirement savings. The good news is most 401(k)s, IRAs, and other retirement plans are exempt from creditors. This means your retirement accounts are likely protected while you get the debt relief help you need. However, if you touch your retirement investments at any point, their exemption status may change. You should take steps to ensure you don’t jeopardize your savings.

Don’t even think about it

An “out of sight, out of mind” approach is best when it comes to your retirement savings and bankruptcy proceedings. You should never:

  • Withdraw from your 401(k): As soon as you cash out your 401(k), it loses its exemption status. You don’t even have to drain the account entirely. Merely moving a portion of your savings to another account will leave your retirement assets vulnerable to creditors.
  • Use your retirement accounts to pay off your debts: When you’re feeling overwhelmed by debt, you can feel desperate. The temptation to use your retirement accounts to pay off your debts is real. It’s best to avoid this temptation. A bankruptcy filing is almost always a better choice for debt relief. If you withdraw from your retirement accounts early, you will not only face a stiff financial penalty, you’ll also have nothing left for your retirement.
  • Shift your assets before filing for bankruptcy: It seems like a smart play to shift some non-exempt assets into a retirement account before filing for bankruptcy. It’s also an obvious play and is one that the law frowns upon. Shifting assets will result in your retirement accounts losing their exemption status at best and could lead to criminal fraud charges against you at worst.

Don’t allow your concerns about your retirement savings to keep you from getting the debt relief help you need. A bankruptcy filing is there to assist you through a difficult time, not make things worse. You should discuss your options with a professional who understands the bankruptcy system.

No Comments

Leave a comment
Comment Information

Contact An Experienced Attorney

Se Habla Espanol

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Email Us For A Response

Donahue &
Walsh, P.C.

FRS Law
Group

(FLINN, RUBLE & SALAZAR)

FRS Law
Group

(FLINN, RUBLE & SALAZAR)

Granger &
Donahue

Cohen &
Donahue

Palatine Office
800 E Northwest Highway
Suite 602
Palatine, IL 60074

Phone: 815-889-2364
Phone: 847-452-5124
Fax: 847-930-1135
Palatine Law Office Map

Elgin Office
2400 Big Timber Road
Suite 108
Elgin, IL 60123

Phone: 815-889-2364
Phone: 224-276-6641
Fax: 847-930-1135
Elgin Law Office Map

McHenry Office
4310 Crystal Lake Road
Suite C-D
McHenry, IL 60050

Phone: 815-322-9678
Phone: 815-889-2364
Fax: 815-344-8922
Map & Directions

Sycamore Office
145 S. Sacramento Street
Sycamore, IL 60178

Phone: 815-322-9678
Phone: 630-202-1559
Fax: 847-930-1135
Sycamore Law Office Map

Rockford Office
One Court Place
Suite 100
Rockford, IL 61101

Phone: 815-322-9678
Phone: 779-203-9049
Fax: 815-329-6768
Rockford Law Office Map