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Retirement Accounts and Bankruptcy


November 09, 2008
Topic: Bankruptcy

In Rousey v. Jacoway, (April 4th, 2005), the Court held that assets in Individual Retirement Accounts (IRA's) are protected under 11 U.S.C § 522(d) and thus exempt from withdrawal from the bankruptcy estate.  This is important because the majority of Americans hold their retirement savings in 401(k)s, IRA, in lieu of pension funds.   

The Bankruptcy Prevention and Consumer Protection Act passed in 2005 drastically changed the face of bankruptcies, particularly for those trying to file a Chapter 7. However, the Court's decisions in Rousey has remained good law.  Therefore, a person who is thinking about bankruptcy does not need to exhaust their retirement, social security, or other exempt accounts prior to being eligible for a discharge of debt to non-secured debtors. 

Please call as at the Arnold Law Firm to discuss your financial situation to see if bankruptcy is in your best interest. 


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