Full question:
I was in an accident (my fault) although my ins was 3 people 100,000 each, two people will be over 100,000. I am disabled and collect a small pension from my late husband. I also own my house out right and have an IRA. What is protected? I am afraid of losing my house and it is the only thing that keeps me going as I spend 99 % of my time here.
- Category: Debts and Credit
- Date:
- State: Washington
Answer:
If you have a homestead exemption, your home may be protected from creditor claims up to $125,000. Two key factors determine if your retirement assets are protected: whether they are considered property of the estate and if they can be exempted. Recent changes to the Bankruptcy Code allow for a federal exemption for IRAs and similar retirement accounts, capped at about $1 million, applicable in all states (11 U.S.C. § 522(n)).
The Supreme Court ruled that retirement plans with an anti-alienation clause (which prevents creditors from accessing the funds) are not part of the bankruptcy estate and cannot be used to pay creditors. Most pensions and 401(k) plans under ERISA have this clause. However, single-participant plans or certain self-employed plans may be vulnerable to creditors unless exempted.
Assets not considered property of the estate do not need exemption claims; they are simply not included in the calculations for creditor claims. For more details, you can refer to the Bankruptcy Code (11 U.S.C. § 522) and relevant state laws, such as the Washington homestead exemption (RCW 6.13.030), which outlines protections for your home and personal property.
For specific advice regarding your situation, consulting a legal professional is recommended.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.