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If you are close to retirement but find yourself having to file for bankruptcy, a top concern will naturally be how this will impact your retirement accounts. When filing Chapter 7, the court will look to seize any non-exempt assets so that it can liquidate them and use the money to pay back your creditors.

Luckily, you have some protection for your retirement accounts, depending on what type of account they are and how much money you have in them.

Your 401k

According to Bankrate, your 401k likely has the most protection against seizure in a bankruptcy. As long as you keep the money in your 401k account, the court will not touch it. However, the minute you access it, it becomes an asset that the court may seize.

So, you need to leave your 401k alone during your bankruptcy and check with your attorney about when you can access it without penalty from the bankruptcy court.

Other accounts

You may be able to exempt other retirement accounts you have using the state or federal exemptions. However, these exemptions are often quite low in value, so you may only be able to save a portion of any account. Checking, savings and other bank accounts are especially vulnerable in a bankruptcy. If your retirement savings is mainly in a savings account, you can expect to lose most if not all of it to the liquidation process.

You will need to work carefully with your attorney to determine how best to legally protect your retirement funds. Planning ahead is your best bet to protecting as much of your retirement savings as possible.