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Should I Draw On My Retirement Before or After I File Bankruptcy? – Ryan

“Dear Lewis,

Recently divorced, left financially and emotionally wiped out, decided to resign and take a year off for travel and healing. Currently have 40K in unsecured debt and about 7K in savings. Was planning on drawing on my retirement (about 50k) of it, to finance the upcoming year.

Question is, can I file for chapter 7 bankruptcy, and still draw on the retirement without having it taken by creditors?

After a year is up, finding new work at abut 125-150K will not be a problem, restocking retirement will not take more than a year or two.

With $7000 in savings, no assets of significant value, and 40K in unsecured debt, can I file for chapter 7 bankruptcy, and then collect about 50K of my retirement funds early?


Dear Ryan,

The best course of action is to file chapter 7 now and discharge the debt. Then what you do with your exempt retirement after the filing the case is your business and cannot be touched by your creditors.

But I want to be clear on your timeline. It is best to file the chapter 7 first, then draw on retirement. I would not draw on retirement, then file chapter 7 later. That could create potential problems in qualifying for chapter 7 under the means test.

The best piece of advice I can give you: since you are planning your bankruptcy filing, see a bankruptcy attorney now in the planning stage. Then you can make sure you are fully protected.

Good luck!

My name is Lewis Roberts and I’m an attorney licensed in Florida and Georgia. My practice focus is consumer bankruptcy, real estate issues/closings, and mortgages. I also have Florida real estate broker and mortgage broker licenses. I am a proud member of the National Association of Consumer Bankruptcy Attorneys (NACBA), National Association of Consumer Attorneys (NACA), and a graduate of Max Gardner’s Bankruptcy Boot Camp. I enjoy helping people with decisions that impact their financial well-being.

Legal Disclaimer: This is for educational purposes only. It is not to be relied upon as legal advice. It also does not create an attorney-client relationship. No such relationship is formed with attorney without a written agreement.

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About the author

Lewis Roberts

Florida Consumer Protection Attorney

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