Bankruptcy and Your Retirement | The Law Offices of Thomas J. Orr

Bankruptcy and Your Retirement

Bankruptcy and Your Retirement

Are you preparing for retirement and considering filing for bankruptcy? If so, you may be wondering if your retirement funds will be safe from your creditors. Bankruptcy law states that all retirement accounts and pension plan funds are exempt with a few limitations.

In 2005, Congress overhauled the bankruptcy laws. Virtually all retirement account and pension plan funds are exempt from creditors under the current law. This means that you get to keep your accounts if you file for Chapter 7 bankruptcy. In Chapter 13 bankruptcy, because your retirement accounts are exempt, they won’t affect how much you must repay unsecured creditors.

Exemption amounts are unlimited with a few exceptions. This means that the entire amount of the retirement account is protected. This exemption includes the following ERISA-qualified pension plans:

  • 401(k)s
  • 403(b)s
  • IRAs (Roth, SEP, and SIMPLE)
  • Keoghs
  • Profit-sharing plans
  • Defined-benefit plans

There are some limitations to exemptions for traditional and Roth IRAs. For IRAs and Roth IRAs, the exemption from creditors is limited to $1,283,025 per person. This amount takes into consideration all of your retirement accounts combined. Any amount above and beyond this in your retirement accounts can be used by the bankruptcy court to pay back your creditors. This amount is adjusted every three years to account for cost of living increases.

Many of my clients often wonder if their retirement benefits are safe. If you are receiving income from a retirement account, that income counts toward your budget, the same as wages. The underlying account is protected.

I am here to help if you have any questions about bankruptcy and retirement. Contact me today to schedule an appointment to discuss your options.


Hundreds of thousands of Americans, including consumers and business owners, file for bankruptcy each year. While many think this situation is the result of overspending, most cases are due to financial hardship such as job loss, costly medical bills, divorce, or a poor economy.


I’ve been practicing bankruptcy law in Burlington, New Jersey for over 33 years. With just one location, I can focus exclusively on helping my clients make their way not only through bankruptcy, but well past it. We will work together to explore all of your options and determine if bankruptcy is the right choice for you. The goal is to get you on the path to a new beginning.


If you’re losing sleep, feeling scared or even embarrassed, let’s talk. There is life after bankruptcy and it starts here. My offices are located in downtown Burlington, near the Riverline train stop. I provide Saturday and evening hours as needed. I offer payment arrangements to fit your budget. Contact my office today at ​​609-386-8700.


Start your path towards a new financial beginning. Contact our offices today!
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