When you file for bankruptcy, in most cases you will be able to hold on to your retirement plans as they are protected by the federal government. There are very few exceptions to this rule. It is important you are aware of what restrictions do exist so that you will be able to plan accordingly. Remember it is unlawful to hide any savings or to give your savings to friends or family in order to keep them from being discovered in bankruptcy proceedings. When it comes to retirement plans and bankruptcy in Georgia, the more honest you are the better off you will be.
Retirement Plans Are Considered Exempt Property
Whether you are filing for Chapter 7 or Chapter 13, you will have to provide a list of all property which the trustee will then judge to be either exempt or non-exempt. Non-exempt means it can be used to pay off secured debt. As far as retirement plans and bankruptcy in Georgia are concerned, these plans are considered to be a part of your exempt property:
- IRAs (Roth, SEP and SIMPLE)
- 401(k)s
- 403(b)s
- Profit-sharing plan
- Defined-benefit plans
- Keoghs
- Money purchase plans
The only exception you need to be aware of is that there is a limit of $1,095,000 on traditional and Roth IRAs. This means anything beyond that amount can be used to pay off portions of your unsecured debt. Bear in mind this exemption is only for the money which is static in your account or grows without your earning anything currently. Any pay-outs from investments will be subject to further scrutiny from the court. Once again, it is best to be honest when it comes to retirement plans and bankruptcy in Georgia.
Loans from Retirement Accounts
If you have used money from your retirement account to pay off debts or to buy things, you will have to report this in your bankruptcy. This is subject to review when you use these accounts to buy things which are not necessary to the survival of your family. Any income based on the loan from these accounts will also be subject to scrutiny from the court. In a Chapter 13 bankruptcy, it is possible to repay the loan from your account within a 3 to 5 year program of repayment.
Voluntary Payments to Retirement Plans
Any contributions which are made to your requirement account from a paycheck or regularly will have to come to a halt once you file for bankruptcy. This is because if you can make deposits to your account, you can make payments towards the debt you have incurred to date. This will help you to get your debt paid down is not paid off so that once you retire you will not have that looking over your head. Bear in mind, the sooner it is paid off, the sooner you can resume making additions to your retirement fund.
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- Exempt vs. Non-Exempt Property in Chapter 7 Bankruptcy in Georgia
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