Are IRA's and retirement accounts protected in bankruptcy?
IRA's and retirement accounts are protected in bankruptcy.
Attorney Tom Olsen: Chapter seven bankruptcy here in the state of Florida, which is a straight liquidation bankruptcy and it might used to have been the most common type bankruptcy but maybe not so much anymore.
Attorney Jim Monroe: Well, it is. It's still the majority of cases filed. But in 2005, they changed the law to impose what they call a mean stance. What it really is is an income test. So it takes a look at the family size of the household and if you make above a certain amount and you have consumer debts, then you may not be eligible for a straight chapter seven. You may have to file a chapter 13, which is a reorganization of your debts over a period of five years.
Attorney Tom Olsen: If you file a chapter seven here in Florida, you get to keep your home as I understand it.
Attorney Jim Monroe: That is an interesting issue because while Article 10 section 4a of the Florida Constitution says, yes, there are some limitations now since the changing of the code in 2005, that define what equity you're allowed to keep if you file within certain time periods. Without going into that a little bit further, we don't have another hour to talk about all the types of situations that can arise where you might find yourself in trouble if you filed a bankruptcy without some legal guidance in keeping your home.
Attorney Tom Olsen: If you've owned your home for a number of years, you might very well qualify to keep it even in bankruptcy.
Attorney Jim Monroe: That's correct. It's half an acre inside the city limits and up to 160 acres in the county.
Attorney Tom Olsen: What about IRAs, retirement accounts, 401Ks?
Attorney Jim Monroe: Those are pretty much protected under federal statute state law and Supreme Court decisions.
Attorney Tom Olsen: Very good. Hey folks. My guest today is Attorney Jim Monroe.