Bankruptcy - Will I Keep My 401k If I File in Georgia?

Bankruptcy – Will I Keep My 401k If I File In Georgia?

When you file bankruptcy in Georgia, you will most likely keep all of your 401k retirement. I have been practicing consumer bankruptcy law since 1998 and I’ve never seen any debtors lose any of their 401k after they filed bankruptcy in Georgia.

I meet with clients all the time from Dallas, Rome, Cartersville, Hiram, Douglasville, Calhoun and Dalton Georgia who are scared to death that they are going to lose everything they own when they file bankruptcy.  Fortunately, Georgia has exemption laws that protect most of your personal assets.  In my humble opinion, one of the best Georgia exemption laws is the protection of 401k and retirement assets.  People filing bankruptcy should not have to worry about losing their 401k retirement.

Section 44-13-100 of the Georgia Code states,

“Exemptions for purposes of bankruptcy and intestate insolvent estates

(a) In lieu of the exemption provided in Code Section 44-13-1, any debtor who is a natural person may exempt, pursuant to this article, for purposes of bankruptcy, the following property: ”

And the the GA Code continues with the following:

“2.  The Debtor’s right to receive…..(F) A payment from an individual retirement account within the meaning of Title 26 U.S.C. Section 408 to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;”

The key words in the statute are “to the extent reasonably necessary.”  How much of your 401k will you need to support yourself during your retirement to the extent reasonably necessary?  How many years will you live after you retire?  Ten years? Twenty years?  How much will you have to spend on medicine?  How much will you need to spend on housing?  How much will you need to spend on food?  How much money would it take to reasonably support you for twenty years after you retire?  For most people, the answer is all of their 401k.

In conclusion, you should take a deep breathe and relax.  Your 401k is safe.  When you meet with your bankruptcy attorney, make sure all of your assets are listed on your bankruptcy petition so that your bankruptcy attorney can claim every exemption possible.

Other Posts:

1.  Don’t borrow against your 401k to pay off credit cards or medical debt!

2. What is Chapter 13?

3. What is Chapter 7?

4. How much does it cost to file?

5.  How do I stop this garnishment?