Many people considering bankruptcy often worry about their benefits and whether these fund will be protected. While the bankruptcy process can’t protect everything, it certainly protects the important stuff like government or retirement benefits.
The bankruptcy code allows for most of the important assets to be protected from liquidation in bankruptcy, including certain benefit funds. Bankruptcy exemption laws differ from state to state, even these and the federal exemption laws all protect benefit funds from being seized to satisfy debt payments on consumer debts.
This means that life insurance benefits, retirement plans, military benefits, Social Security and government assistance funds are not eligible to be used for purposes of repaying creditors in bankruptcy. One exception to this rule would be if the benefits are used to repay debt obligations on back due child support, unpaid taxes or criminal restitution payments.
Since each state has different laws regarding the amounts of benefit protection in bankruptcy, it is a good idea to seek counsel about debts and benefits prior to filing. A Dallas bankruptcy lawyer can help ensure your benefits can be, and are, protected to the fullest extent in your case.