Don’t spend down any of your retirement before you file your bankruptcy.

I should add, unless it’s over $1 million.  That’s right.  You can save up to $1 million in a government approved retirement fund like a 401k  or IRA and it will be exempt in the bankruptcy.  That means you can get rid of your debts and keep the retirement fund to spend as you wish.

The government did this in the 2005 changes to the bankruptcy laws because they wanted people to be able to keep their retirements so they would not become destitute after a bankruptcy and then become wards of the state.  It is a great rule for debtors because this is obviously a lot of money that creditors can’t touch in a bankruptcy and its money that you can keep.

Yes, you can file bankruptcy, discharge your debts, and keep your retirement money intact.  It’s a pretty good deal and one of the few good things that came out 2005 revision of the bankruptcy laws.  That law was written by the credit card companies themselves through their lobbyists and it was designed by these companies to reduce the amount of money they were losing in the bankruptcies of their customers.

We are lucky therefore that they didn’t just change the law to allow them to get access to these accounts.  They did not though so for now you can keep your retirement funds in a bankruptcy.

File bankruptcy soon (if you need to) before they send their lobbyists in the alligator shoes to stroll the halls of Congress again to take back your right to keep your retirement in bankruptcy!

I am a bankruptcy lawyer practicing in San Diego.  For further help please visit my website at

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