How does a Chapter 11 bankruptcy affect my retirement accounts?

A Chapter 11 bankruptcy, which is the most complex and expensive type of bankruptcy, can affect retirement accounts in Minnesota. When a person files for Chapter 11 bankruptcy, the court will create a repayment plan. This plan allows the person to make payment on their debts over a period of time. During a Chapter 11 bankruptcy, all of the person’s assets, including retirement accounts, must be included in the repayment plan. This means that all retirement contributions made within 180 days prior to the filing must be included in the repayment, allowing the court to use the funds to pay off creditors. It is important to note, however, that the court cannot take funds from any retirement accounts that are protected by ERISA or the Taxpayer Relief Act. This type of protection applies to 401(k)s, IRAs, and most other retirement accounts. If the retirement accounts are protected, the funds in them cannot be used to pay off creditors. Finally, it is important to know that while filing for Chapter 11 bankruptcy can affect retirement accounts, it does not necessarily mean that the retirement account will be completely wiped out. Depending on the circumstances, the court may only require a portion of the funds to be used for repayment, allowing the filer to keep some of their retirement savings.

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How does a Chapter 11 bankruptcy affect my retirement accounts?

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