What Will Happen To My 401(K) In Bankruptcy?

: Reese Baker & Associates

  Filed under: Filing bankruptcy

bankruptcy attorney Houston Texas, savings, 401(k), bankruptcy, attorney, help,Once you go bankrupt, the property that you own goes into what is called a bankruptcy estate. Some of your property and assets may be exempt from this but it will depend on the State that you are filing in, as well as, which form of bankruptcy you are going for.

It is not uncommon for a lot of individuals to fall into financial difficulties because of medical bills and other debt that has accumulated. At the same time they may have substantial savings that they have built up in their 401(k) and they are now worried as to what will happen to this if they go bankrupt.

In most cases any type of retirement account will be exempt from the bankruptcy estate. When the 401K is protected under the Employee Retirement Income Security Act (ERISA) it will not become part of the bankruptcy. There are some pension plans however that are not under this protection but that may have further protection under the State and Federal bankruptcy rulings.

Ideally what you want to do right from the very beginning is seek out a qualified bankruptcy attorney who is going to be able to guide you through the bankruptcy process, and will also be able to give you all the information that you need to know as to what will be protected in your particular case and what may become part of the bankruptcy estate.

If you have borrowed against your 401(k) plan which is a possibility because of your financial situation you must be sure to discuss this with your bankruptcy attorney as that particular loan against this pension may not be discharged in your bankruptcy.