When you file for bankruptcy in Texas, some of your assets might be up for grabs. You can part with certain assets, but other ones are necessary for a happy and fulfilling life. Do you have to give up your retirement fund when you file for bankruptcy?
What happens to your retirement fund?
Typically, you won’t lose your retirement fund when you file for bankruptcy. If your employer offers a retirement fund, those funds are usually off-limits to creditors. They might be able to seize part of your IRA, but most–if not all–of your IRA will probably be exempt during the proceedings. In general, state and federal laws protect your retirement fund from creditors.
However, these exemptions don’t apply to the IRS. If you owe back taxes, the IRS can seize part of your retirement fund to pay off your debts. You could talk to your bankruptcy attorney to see if you can protect your assets, but most protection laws don’t apply to the federal government. You might also have to give up part of your retirement fund if you’re going through a divorce at the same time and received a qualified domestic relations order (QDRO). A QDRO makes your estranged spouse entitled to a percentage of your retirement fund.
How can you protect your assets?
If you’re thinking about filing for bankruptcy, you’re probably worried about more than your retirement fund. You might be worried about keeping your house, vehicle, savings, investments and other assets. Luckily, state and federal laws make certain assets exempt from seizure. An attorney could tell you which assets are exempt and which assets you’ll have to sell off. You might be surprised by the assets you’re allowed to keep.