Because I save a lot of money in my retirement accounts, I've always been concerned about what would happen if I somehow received a judgment against me. Perhaps I need not have worried.
On October 17, 2005, the bankruptcy reform law, formally named The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (11 USC 101), went into effect and apparently protects most retirement accounts.
SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.Basically, it appears the bankruptcy law allows you to protect most retirement accounts against creditors when you declare bankruptcy. For more information, you should contact a CPA or tax attorney.
(a) In General.--Section 522 of title 11, United States Code, is
(1) in subsection (b)--
(A) in paragraph (2)--
[[Page 119 STAT. 63]]
(i) in subparagraph (A), by striking ``and''
at the end;
(ii) in subparagraph (B), by striking the
period at the end and inserting ``; and'';
(iii) by adding at the end the following:
``(C) retirement funds to the extent that those funds are in
a fund or account that is exempt from taxation under section
401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue
Code of 1986.''