Supreme Court Protects IRAs When Filing Bankruptcy
On April 4, 2005, the United States Supreme Court held that, as a matter of federal bankruptcy law, Individual Retirement Accounts (IRAs) are exempt from the reach of creditors in a bankruptcy case.
n the case, entitled Rousey v. Jacoway, No. 03-1407 (April 4, 2005), the Court unanimously held that a married couple in a Chapter 7 bankruptcy case could shield their IRA assets from their creditors as exempt property under the Bankruptcy Code. The Court reasoned that because IRAs are like other benefit plans (such as pension plans, 401(k) plans, and other similar benefit plans that provide for payments because of "illness, disability, death, age or length of service"), they are entitled to the same exempt status that these other benefit plans already have under federal bankruptcy law.
The decision applies to 16 states and the District of Columbia that don't have their own laws that protect IRAs: Alaska, Arkansas, Connecticut, Hawaii, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Dakota, Texas, Vermont, Washington and Wisconsin. Wherever you may be located, your IRAs are now protected from your creditors when you file for bankruptcy.
To find out more about the Supreme Court's decision, or to talk to an experienced bankruptcy attorney about your bankruptcy options, please don't hesitate to call us toll free at 1-877-349-1309, or use our free online case evaluation form to schedule a no obligation consultation with one of our attorneys.
To learn more about bankruptcy, you can read about Chapter 7 and Chapter 13, and whether bankruptcy is right for you.