Is my 401(k) protected in a Bankruptcy?
Qualified retirement accounts, including 401(k)'s, are generally protected in a personal bankruptcy case. This means that protected retirements accounts remain your property during and after a bankruptcy case. At the Law Offices of Scott W. Spradley, P.A., I personally review your retirement accounts with you so that I can properly advise you as to whether your accounts are protected and will remain yours in the event a bankruptcy is filed.
Since the Bankruptcy Code allows you to retain certain retirement accounts, it is usually a bad idea for you to make withdrawals from your 401(k) to pay off credit card debt. This is because if your financial circumstances suggest you should file a bankruptcy case, the credit card debt will usually be discharged in its entirety. Paying down the balances of credit cards with retirement funds that will be exempt in a bankruptcy case is arguably the equivalent of throwing your money away. So, before you make a withdrawal from your IRA or other qualified retirement account to pay down or pay off a credit card or other debt, schedule an appointment with me at the Law Offices of Scott W. Spradley, P.A. for a free consultation.