Having financial difficulties is one of the more challenging aspects of life to handle. To those who have considerable debt, it may seem as if their money problems are holding them back from everything in life. Though bankruptcy could be a debt relief option to consider, some Louisiana residents may worry that it could wipe out funds in their retirement accounts and create greater turmoil.
Fortunately, federal laws provide protections for retirement accounts during bankruptcy. Though employer-provided retirement accounts have had these protections for some time, the Bankruptcy Abuse Prevention and Consumer Protection Act added protections for IRAs in 2005, among other changes. Before federal protections for IRAs were in place, it was up to state law to determine how this type of retirement account was addressed during bankruptcy.
Of course, the amount of money in those accounts can also play a role in the amount of protection from bankruptcy that exists. For instance, individuals who have a traditional IRA or a Roth IRA have protection for up to $1,362,800. The protection limit has increased from the initial $1 million protection limit due to inflation adjustments, which take place every three years.
It is understandable to have concerns over losing retirement funds when looking for debt relief. Fortunately, most Louisiana residents who file for bankruptcy will likely find that these accounts are protected. To gain more information on how retirement accounts are addressed during this legal process, interested parties may wish to discuss their concerns with knowledgeable bankruptcy attorneys who can provide insight into specific scenarios.