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Law Offices of Stephen Orchard Law Offices of Stephen Orchard

Boca Raton Bankruptcy & Retirement Lawyer

Overall, the bankruptcy filing rate has declined significantly since the 1990s. However, largely due to a shrinking social safety net and longer life expectancy, over-65 bankruptcy filings have increased significantly since then. These debtors are especially concerned about protecting their retirement accounts and Social Security benefits. Retirement nest egg accounts represent a reward for a lifetime of financial sacrifice, and about 40 percent of retirees depend almost entirely on Social Security income.

The diligent Boca Raton bankruptcy & retirement lawyers at the Law Offices of Stephen Orchard work hard to find cost-effective, long-lasting solutions to these complex problems. So, we not only explain your legal rights in terms of property exemptions. We also help you maximize these property exemptions, so you can keep more of your hard-earned money as you eliminate debt.

The Retirement Account Exemption

Most people have defined contribution accounts, such as an IRA or 401(k). The more money account owners put into these accounts, the more they can withdraw after they reach the minimum age, which is usually 59-and-a-half. Some people have pension plans and other defined benefit accounts. They receive the same amount of benefits almost regardless of how long they have worked for the employer or any other circumstances.

Many property exemptions in Florida have dollar limitations. For example, the law protects a certain amount of home equity, but doesn’t technically protect the home itself. Defined contribution and defined benefit retirement accounts are different. The Supreme Court has repeatedly stated that such accounts are 100 percent exempt, regardless of their value.

This exemption is very important, and not just for the aforementioned emotional reasons. A significant amount of cash in a retirement account is a tempting liquidation target for many creditors. The non-bankruptcy exemptions might not shield this money, but a Chapter 7 or Chapter 13 filing always has this effect.

Chapter 7 eliminates credit cards, medical bills, and most other unsecured debts in as little as nine months. Chapter 13 gives filers up to five years to repay secured debt delinquency, like past-due mortgage payments, on their own terms.

Social Security Benefits Exemption

Government benefits, including Social Security benefits, are 100 percent exempt as well, even if they come in the form of monthly checks, like income from a job.

This observation brings up a common problem that our Boca Raton bankruptcy & retirement lawyers frequently deal with. Government benefits, such as Social Security, VA disability, unemployment, and other benefits are exempt assets under the Bankruptcy Code. However, income is usually not exempt.

If the debtor keeps income and benefit money in the same account, as most people do, the funds become commingled and different to separate. Since many creditors are very aggressive, they could use this commingling as an excuse to try and garnish your Social Security benefits.

Therefore, we usually recommend that people keep government benefits and income in separate accounts. Always speak to an attorney before you transfer money in this way. Such changes could fuel a bankruptcy fraud allegation. These allegations are defensible in court, but the process is expensive and time-consuming.

Reach Out to a Diligent Palm Beach County Bankruptcy & Retirement Lawyer

If crushing debt is a problem, legal solutions are available. For a free consultation with an experienced Boca Raton bankruptcy & retirement attorney, contact the Law Offices of Stephen Orchard. After-hours visits are available.

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