Q Is Your 401(k) Safe in Bankruptcy?
If you file bankruptcy, your 401(k) will be protected.
Bankruptcy exists to give you a fresh start. It's a merciful law with the aim of getting people back on their feet. So it doesn't benefit anyone if it also destroys a person's retirement. For that reason, bankruptcy doesn't hurt your 401(k) as long as it stays where it is.
What You Don't Want To Do To Your 401(k) During Bankruptcy
Just remember: Don't move money out of your 401(k) just because you think it's safe. Sometimes during a bankruptcy, people think those funds are protected so they'll take them out and use them for purchases. As soon as the 401(k) is converted into something else, it isn't protected anymore.
So your 401(k) isn't safe if you convert the money to a regular savings account or use the money for anything else.
If you come in to see a lawyer at our firm, we'll walk you through exactly what you can expect. We'll let you know what debts would be covered in your bankruptcy and how to protect funds like your retirement savings.
If you're worried about your savings or retirement funds and bankruptcy, you shouldn't wait to speak with an attorney. Your debts will only get worse and set you up for a tough retirement down the road.
Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. If you need the fresh start bankruptcy can provide, call us today at 816-842-6200 to speak with an attorney. Or click here to email us and schedule your free consultation.