You may wonder what effect bankruptcy may have on your retirement savings. The good news is, very little. However, it does depend on where your retirement savings are. For example, if you have been putting money aside in a simple bank account or investing through shares then these savings may well be at risk. If you have put your money into a retirement plan then they should be safe.

Apart from your home, your retirement savings is your biggest single asset. The aim of Chapter 7 petition for bankruptcy is to discharge all eligible debts. To achieve this, a debtor must forfeit all non-exempt assets to pay at least some of these debts. Whilst retirement savings could well pay all your debts, they are protected.

For senior citizens, retirement accounts and pensions are generally exempt assets as well. This means the senior citizen can still receive their pension rather than forfeiting the funds. Funds such as the 401(k), 403(b) and 457(b) are all good examples of funds that are exempt under Federal Law.

In recent years, it has become common for senior citizens to file for bankruptcy due to crippling medical bills. Their pensions are safe and in most cases qualify for Chapter 7 filings. If you are unsure of your situation, particularly if you are a senior citizen with pension or retirement savings entitlements, contact a lawyer before commencing proceedings. An experienced lawyer will be able to provide advice on whether your retirement savings are exempt or not. Don’t risk those savings when they may be all you have left after a successful filing.