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If you’re considering filing for Chapter 13 bankruptcy in Raleigh, one of your main concerns may be protecting your retirement funds. After all, it’s likely the largest asset you have and in some cases, the sole source of income in your senior years.
The good news is that your retirement plan is generally safe from creditors and debt collectors during a Chapter 13 bankruptcy case. However, there are some nuances to be aware of – which is why we strongly recommend talking to Attorney Weik before you make any decision.
Here’s what you need to know about protecting your retirement accounts when filing for Chapter 13 bankruptcy in Raleigh.
What Happens to Your Retirement Plan When You File for Bankruptcy?
When it comes to filing for bankruptcy in Raleigh, NC, your retirement plan will be treated differently depending on whether you file for Chapter 7 or Chapter 13.
In a Chapter 7 case, the court will typically exempt all of your retirement funds from liquidation. That means they won’t be used to pay off any of your debts.
In a Chapter 13 case, all of your retirement funds will also be exempt from liquidation – but they may still be counted as part of your income when calculating your repayment plan. This means that if you have a large balance in your retirement account, it could affect how much you owe each month under the plan.
The specifics depends on a case-to-case basis, and Attorney Weik will explain it to you during your free consultation.
Exemptions for Retirement Accounts in Raleigh, NC
In North Carolina, all tax-exempt retirement accounts are completely protected under federal law. This includes the following:
- 401(k)s
- 403(b)s Profit-sharing and money purchase plans
- SEP and SIMPLE IRAs
- defined benefit plans
North Carolina bankruptcy laws also offer unlimited exemption to Roth IRAs and IRAs under state law. And unlike many other states, this includes inherited IRAs.
Be Careful About Withdrawing Funds from Retirement Accounts
We understand that times can get tough when dealing with overwhelming debt – which is why it can be tempting to withdraw funds from your retirement accounts early as a way of paying off bills or making ends meet.
If creditors believe that you withdrew money with the intention of avoiding repayment (i.e., fraud), they could try to seize those funds as part of a lawsuit or garnishment order even if they would normally be exempt under federal or state law.
That’s why we recommend talking to Attorney Weik before making any decisions about withdrawing money from these accounts prior to filing for bankruptcy in Raleigh NC.
Protect Your Golden Years with Weik Law Office
Filing for Chapter 13 bankruptcy can help keep your retirement funds safe while giving you breathing room from debt collectors.
To learn more about how this works for your situation, contact Weik Law Office today at 919-845-7721 for a free consultation. We look forward to hearing from you soon.